Con-Forte Contracting Limited Partnership v. Eagle Hill Developments Ltd., 2012 ABQB 724

Court of Queen ’ s Bench of Alberta Citation: Con-Forte Contracting Limited Partnership v. Eagle Hill Developments Ltd., 2012 ABQB 724 Date: 20121129 Docket: 0801 01987, 0801 04082, 0801 04940, 0801 07096, 0801 15242, 0801 07959, 0801 06852, 0801 13202, 0801 03393 Registry: Calgary Between: 0801 01987 Con-Forte Contracting Limited Partnership Plaintiff/Applicant v. Eagle Hill Developments Ltd. Calgary I Grand Riviera, ULC MI Wuk Holdings I, ULC Defendants/Respondents And Between: 0801 04082 Custom Electric Ltd. Plaintiff/Applicant v. Eagle Hill Developments Ltd. MI Wuk Holdings I, ULC Defendants/Respondents

And Between: 0801 04940 Keystone Excavating Ltd. Plaintiff/Applicant v. Eagle Hill Development Ltd. MI Wuk Holdings I, ULC Ulysses Development Corp. Keystone Excavating Ltd. Calgary I Grand Riviera, ULC Defendants/Respondents And Between: 0801 07096 Global Engineering & Testing Ltd. Plaintiff/Applicant v. Eagle Hill Developments Ltd. Ulysses Development Corp. Calgary I Grand Riviera, ULC ULC MI Wuk Holdings I, ULC Defendants/Respondents And Between: Action No. 0801 15242 Dynamic Concrete Pumping Inc. Plaintiff/Applicant v. Eagle Hill Developments Ltd. MI Wuk Holdings I ULC Calgary I Grand Riviera, ULC Calgary I Riviera L.P. Defendants/Respondents

And Between: 0801 07959 Master Built Mechanical Contracting Ltd. Plaintiff/Applicant v. Eagle Hill Developments Ltd. MI Wuk Holdings I, ULC Calgary I Grand Riviera, ULC, Ulysses Development Corp. Defendants/Respondents And Between: 0801 06852 Manu Chugh Architect Ltd. Plaintiff/Applicant v. Suede Living Inc. MI Wuk Holdings I, ULC Ulysses Development Corp. Defendants/Respondent s And Between: 0801 13202 Laurentian Bank of Canada Plaintiff v. Susan Thompson, Mark Davis, MI Wuk Holdings I, ULC Defendants

Between: Docket No: 0801 03393 Tolosa Development Corp. Plaintiff /Respondent - and - Calgary 1 Grand Riviera, ULC, Calgary 1 Grand Riviera, LP, MI Wuk Holdings I, ULC, Nixious Investments Inc., Tolosa Development Corp., Ulysses Development Corp., Richard Gariepy, Gariepy & Lloyd, Suede Living Inc., Alex Karmis, 11138246 Alberta Ltd., 1155733 Alberta Ltd. Dylan Elash, Manu Chugh Architect Ltd. Eagle Hill Developments Ltd.

Defendants/Applicants Corrected judgment: A corrigendum was issued on December 18, 2012 to correct an error in the style of cause in Action No.: 0801 04082 and the correction is attached. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice D.R.G. Thomas _______________________________________________________ i I. Introduction................................................................................................................ Page: 1

II. Background to the Lien Claims................................................................................... Page: 1 III. Issues.......................................................................................................................... Page: 2 IV. Analysis...................................................................................................................... Page: 3

(1) Grand Riviera and MI Wuk were the registered owners of the Calgary I Lands at the time that builders ’ liens were filed. Are they an “ owner ” of the Calgary I Lands within the meaning of s. 1(

j) of the BLA? ................. Page: 3

(2) Is the MCA Lien valid, and if so, how much is it worth?................................. Page: 9 (

a) Background to the MCA Lien............................................................. Page: 9 (

b) Is the MCA Lien valid?..................................................................... Page: 11 (

c) How much is the MCA Lien worth?.................................................. Page: 14 (

i) Exhibit “ B ” - Invoice dated December 18, 2007................... Page: 15 (ii) Exhibit “ C ” - Invoice dated January 15, 2008....................... Page: 15 (iii) Exhibit “ D ” - Invoice dated June 25, 2008............................ Page: 15 (iv) Exhibit “ E ” - Invoice dated June 28, 2008 .......................... Page: 16

(3) How should the lien fund be calculated and distributed in this case? If a lien fund cannot be determined, then on what basis should the Laurentian Funds be distributed, if at all?...................................................... Page: 17 (

a) Calculation of the lien fund and distribution under the BLA ............. Page: 18 (

b) Distribution as encumbrances enforceable against the Laurentian Funds.............................................................................. Page: 22

(4) Are any of the other encumbrancers entitled to any of the Laurentian Funds?.......................................................................................................... Page: 23 V. Conclusion .............................................................................................................. Page: 24

SCHEDULE “ A ” ................................................................................................................... Page: 26 I. Introduction [ 1 ] Further to my judgment in Tolosa Development Corp. v. Calgary 1 Grand Riviera , 2012 ABQB 519 (the “ Tolosa Judgment” ), this decision deals with the fate of seven (7) claims arising from builders ’ liens registered against the Calgary I Lands under the Builders ’ Lien Act , R.S.A. 2000, c. B-7, (the “ BLA ” ). The claims are made by the Lien Claimants (as defined in

Schedule “ A ” ) and they are Con-Forte, Custom Electric, Keystone Excavating, Global, Dynamic, Master Mechanical, and Manu Chugh Architect ( “ MCA ” ).

[ 2 ] All of the Lien Claimants, except MCA, have proven their respective builders’ liens in applications made before several of the Masters in Calgary. In the case of the builders ’ lien filed by MCA (the “ MCA Lien ” ), I have decided that this lien is valid and have assigned a value to it. The Lien Claimants seek to enforce their claims against funds in the amount of $597,057.55 plus interest, if any, (the “ Laurentian Funds ” ) found in Court in Action No. 0801 13202 (the “ Laurentian Action ” ). II.

Background to the Lien Claims [ 3 ] The background facts in respect to the failed Project are found in the Tolosa Judgment and some of the terms defined in that decision are used here. Construction of the Project on the Calgary I Lands commenced in mid-2007 and involved excavation work, installation of footings, foundations and retaining walls, as well as preliminary mechanical and electrical work.

Design work for the Project had been commenced earlier by MCA, which continued to provide architectural services throughout the early construction phase, until work ceased because the developer, Suede Living Inc. (“Suede Living”), had stopped paying its invoices. MCA had a contract with Suede Living for the provision of architectural services in respect to a number of land developments, including the Project on the Calgary I Lands.

Suede Living was part of the Karmis Group. [ 4 ] The Lien Claimants (except MCA) were all sub-contractors to the construction manager for the Project, namely Eagle Hill Developments Ltd. (“Eagle Hill”), also part of the Karmis Group. [ 5 ] In December, 2007 some of the Lien Claimants received information that the Karmis Group was having problems finalizing construction financing for the Project, but the Lien Claimants continued to provide work and materials on assurances by Eagle Hill that payment would be made in due course.

However, by the latter part of December, 2007 Eagle Hill advised some of the Lien Claimants to stop work until construction financing was arranged. One of the Lien Claimants, Master Mechanical, was encouraged to file a builders’ lien in respect to the work which they had done, but for which they had not been paid. [ 6 ] Work stopped and within the next six weeks all of the builders ’ liens of the Lien Claimants were registered against the Calgary I Lands.

In due course legal actions were commenced and certificates of lis pendens were registered against the Calgary I Lands. [ 7 ] While work on the Project was underway MI Wuk, a wholly owned subsidiary of Grand Riviera, acquired title to the Calgary I Lands from Grand Riviera on December 21, 2007. Both Grand Riviera and MI Wuk are part of the GEMBA Group.

This transfer of title was not an arms length transaction and the reason for the transfer is unclear. [ 8 ] At the time of the transfer of the Calgary I Lands on December 21, 2007, several of the builders’ liens had already been filed by Con-Forte, Custom Electric, Keystone Excavating and Global. Dynamic, Master Mechanical and MCA filed their builders’ liens after the Calgary I Lands had been transferred to MI Wuk. The dates of registration of the seven builders’ liens are shown on

Schedule “A”. [ 9 ] All of the Lien Claimants (except MCA) have proven their builders’ liens and details of the amounts proven, including the details of the Orders confirming proof, and the amounts of the liens are shown in

Schedule “A”. The aggregate value of the lien claims which have been proven (including the claim of MCA), but excluding interest and costs, amount to $643,836.34. [ 10 ] The Lien Claimants now seek a payment out of the Laurentian Funds in satisfaction of their claims, plus interest and costs. [ 11 ] The GEMBA Group, including Grand Riviera and MI Wuk (sometimes collectively referred to as “the GEMBA Group et al.”) dispute the entitlement of the Lien Claimants to any of the Laurentian Funds.

The essence of their position is that the role of the GEMBA Group et al. was to contribute the Calgary I Lands to the Project and then to sit back as “passive investors” while the Project was constructed by the entities making up the Karmis Group.

III. Issues [ 12 ] I have restated and reordered the issues originally stated by the parties. The issues are:

(1) Grand Riviera and MI Wuk were the registered owners of the Calgary I Lands at the time that builders ’ liens were filed. Are they an “owner ” of the Calgary I Lands within the meaning of s. 1(

j) of the BLA?

(2) Is the MCA Lien valid, and if so, how much is it worth?

(3) How should the lien fund be calculated and distributed in this case? If a lien fund cannot be determined, then on what basis should the Laurentian Funds be distributed, if at all?

(4) Are any of the other encumbrancers entitled to any of the Laurentian Funds? IV. Analysis

(1) Grand Riviera and MI Wuk were the registered owners of the Calgary I Lands at the time that builders ’ liens were filed. Are they an “ owner ” of the Calgary I Lands within the meaning of s. 1(

j) of the BLA? [ 13 ] There is no dispute that at all material times Grand Riviera and MI Wuk were the registered owners of the Calgary I Lands until the ownership interest of MI Wuk was foreclosed and the title in its name was extinguished. At the time the work was done and the materials were provided by the various Lien Claimants to the Project either Grand Riviera or MI Wuk were the registered owners of the Calgary I Lands. However, being a registered owner does not make either of these entities an “ owner ” within the meaning of the BLA, s . 1(j).

The only pathway to a finding that these two parties are an “ owner ” within the meaning of the BLA lies through the application of s. 1(j)(iii) and (iv) of the BLA and those provisions are: (j) “ owner ” means a person having an estate or interest in land at whose request , express or implied, and ... (iii) with whose privity and consent, or (iv) for whose direct benefit , work is done on or material is furnished for an improvement to the land and includes all persons claiming under the owner whose rights are acquired after the commencement of the work or the furnishing of the material; [Emphasis added] [ 14 ] The decision of the Alberta Court of Appeal in Acera Developments Inc. v.

Sterling Homes Inc. (“ Acera ”), 2010, 95 CLR, (3d), 161, 2010 ABCA 198 is the most pertinent legal authority to assist in resolving the question of whether Grand Riviera and MI Wuk are an “owner” of the Calgary I Lands within the meaning of s. 1(

j) of the BLA .

[15] Although the facts in Acera are somewhat different from this situation, a brief

summary is helpful. Acera was a developerwhich owned a parcel of land in the vicinity of Cochrane, Alberta. Acera had applied for subdivision approval, but before obtaining it,entered into agreements with several builders for the construction of show/spec homes on the unsubdivided parcel. Those agreementsprovided that a condition precedent to the completion of the sale of lots to the builders was dependent on the successful registration ofthe plan of subdivision following receipt of an approval.

Acera communicated with the builders and provided updates on its progress (orlack thereof) towards approval of the subdivision application. Unfortunately for Acera the subdivision approving authority declined toapprove the subdivision application and the development had to be wound up. Some of the builders who had constructed homes on theunsubdivided parcel registered builders’ liens. In the ensuing litigation Acera took the position with the builders that it had neverrequested that the work be done and that it simply permitted the construction of improvements on the lands in question.

As I have noted,there is an obvious factual distinction between the circumstances in Acera and this case. In Acera there were formal written agreementsin place between the builders and the developer/land owner. Here there is nothing of the sort. However, the Acera decision is importantbecause it contains a focussed analysis which assists in the application of s. 1(

j) of the BLA to the circumstances of this case. I haveparticular regard to the following statements of Berger, J.A. in Acera: 23 The critical question here is whether Acera is an “owner” within the meaning of subsec. 1(

j) of the Act. The relevant inquiry iswhether Acera requested that work be done or material be furnished for an improvement to the lands in question and whetherthe work done and the material furnished by Sterling accrued to the “direct benefit” of Acera. ... 28 Whether there has been a “request” in any given case is a question of fact. The request may be express or implied from thecircumstances of the case: Royal Trust Corp. of Canada v. Bengert Construction Ltd., 1988 ABCA 58 , [1988] 4 W.W.R. 308(Alta. C.A.) (sub nom. Coyes v.

Gypsum Drywall (Northern) Ltd. 50 D.L.R. (4th) 335) per Laycraft C.J.A., aff’g. (1986), (AB KB), 49 Alta. L.R. (2d) 79 (Q.B.). Privity of contract is not a condition precedent to the imposition of liability: MuzzoBrothers Ltd. v. Cadillac Fairview Corp. Ltd. (1981), (ON SC), 34 O.R. (2d) 461 (Ont. Sup.

Ct.) at para. 44. ... 34 Active participation by a liened party in the work being done can bring that liened party within the definition of “owner”through demonstrating an implied request to do work. [Emphasis added.] [16] These statements of the law from the Alberta Court of Appeal bind me and guide my analysis of the evidence available in thiscase in the course of determining whether Grand Riviera and MI Wuk are an “owner” within the meaning of s. 1(

j) of the BLA. Alsoguiding me throughout this decision is the principle that one of the purposes of the BLA is to protect the interests of persons who providegoods and services to improve lands through the creation of a registration process which permits them to file liens against title. [17] Having regard to the statements in para. 23 of Acera, there are two questions which must be asked. The first is whether theGEMBA Group et al. “requested” that work be done on the Calgary I Lands, or that materials be furnished to that property?

The secondquestion is whether the work done and the materials furnished by the Lien Claimants accrued to the “direct benefit” of the GEMBAGroup et al? [18] In answering these questions, I also take guidance from the Supreme Court of Canada in Phoenix Assurance Co. of Canada v.Bird Construction Co., [1984] SCJ No. 39 at p. 7, where the Court stated that the overall arrangement must be examined. That is exactlywhat must be done here to determine whether or not the factual question of whether a “request” has been made can be answered. [19] I begin my assessment of the evidence on the “request” question with a brief

summary of the positions of the parties. [20] The GEMBA Group et al. states that the Project was a “turnkey” investment, in which the GEMBA Group et al. purchasedthe Calgary I Lands at a premium from the Karmis Group and upon completing that purchase had no further financial obligations inrespect of the Project.

They assert that the Karmis Group was to have all responsibility for the development, construction and sales of theProject on the Calgary I Lands, including obtaining all bank financing, making all mortgage payments, hiring and paying all contractorsand pre-selling condominium units in the Calgary I Project. I accept that there is no privity of contract in the sense of formalized writtenagreements between the GEMBA Group et al. and the entities making up the Karmis Group or the Lien Claimants.

The only exception tothis would be the written documents related to the initial sale of the Calgary I Lands from the Karmis Group to Glen Yonekura.

[ 21 ] The Lien Claimants, led in particular by Con-Forte, assert that the GEMBA Group et al. provided incentives to the construction manager Eagle Hill, and through it to the various subcontractors, i.e. the Lien Claimants, except MCA, which carried out improvements to the Calgary I Lands. These incentives were to assure timely production on the part of the subcontractors.

The Lien Claimants characterize the arrangement between the GEMBA Group et al. and the Karmis Group as being one where the Karmis Group would pay the GEMBA Group et al. a set rate of return over a defined period of time during which the Karmis Group had the use of the GEMBA Group et al.’s money. They assert that the GEMBA Group et al. sought and received updates on the progress of construction of the Project and that it was alive to the fact that trades, such as the Lien Claimants (except MCA), were constructing physical improvements on the Calgary I Lands on a predetermined timeline.

In short, they say that there was “active participation” by the GEMBA Group et al. in respect to the construction of the Project. [ 22 ] There is considerable evidence that the GEMBA Group et al. were well aware and indeed, expected that improvements would be made to the Calgary I Lands.

In particular there is the statement in para. 10 of the Yonekura Affidavit that the Project was: “ ... a turnkey project, reflecting the expected added value of professional services, development expertise, bank financing, sales and marketing of units and construction management. ” [Emphasis added.] [ 23 ] This evidence of an ‘expectation’ of added value to the Project on the part of the GEMBA Group et al. forms part of the evidentiary base from which a “request” may be implied and also relates to the second question of the accrual of a direct benefit to a potential “owner”. [ 24 ] The contents of para. 10 of the Yonekura Affidavit are also important evidence because that part of his deposition refers to the proposed terms of the ‘Development Agreement’, which was to be finalized in respect to the construction of the Project.

This agreement was to contain a number of terms, including the hiring and payment of all contractors (para. 10(f)) and the provision of a written ‘Joint Venture Agreement and a Construction Agreement’ (para. 10(g)).

This evidence is significant because it reflects that the GEMBA Group et al. were aware that contractors and subcontractors were to be hired to design and construct the Project. [ 25 ] The Lien Claimants also point to the evidence of connections existing between the original vendor of the Calgary I Lands and Glen Yonekura (who later assigned his interest in the Calgary I Lands to Grand Riviera) and the principal of the construction manager Eagle Hill, namely one Ken Blatz (“Blatz”). He was a corporate director of the original vendor and part of the Karmis Group.

He was also a director of Eagle Hill, which was part of the Karmis Group. This is said by the Lien Claimants to show that the GEMBA Group et al. were well aware that work would be done by Eagle Hill to improve the Calgary I Lands as part of the overall Project. [ 26 ] Important evidence of knowledge by the GEMBA Group et al. that improvements would be made and were, in fact, instructed to be made to the Calgary I Lands is found in the Affidavit of Larry Cooper (“Cooper”), the construction manager of Master Mechanical, one of the Lien Claimants. That Affidavit was made on May 18, 2011 and includes Exhibit “D”.

This is a memorandum dated December 10, 2007 of the ‘To Whom It May Concern’ variety, which was delivered to Cooper and it reflects that problems had arisen in finalizing construction financing for the Project. I find that this memorandum came from the GEMBA Group et al. and that work was being done by subcontractors, such as Master Mechanical and the other Lien Claimants (except MCA). It shows further that the GEMBA Group et al. wanted construction work to continue on the Calgary I Lands, despite the problems with financing.

In fact, the GEMBA Group et al. go so far as to say in the third paragraph of the memorandum: In order to ensure such timely payment and to assure that no disruption to the construction timeline occur at these sites, we will , for the moment, temporarily assume such obligations and make such payments to you to keep the

schedule operating on a timely basis. It is in everyone ’ s best interests that construction on Riviera ... continue as planned and as scheduled without interruption. To this end, we will continue in this primary funding role until our Canadian partner can be contacted, their behavior explained and/or the situation be satisfactorily resolved.

Although this is neither our stated role nor objective in respect to Riviera ..., in this interim period, we will be working closely with the Developer ’ s chosen General Contractor, Ken Blatz and Eagle Development, to deliver Riviera ... on time and on budget. [Emphasis added.] [ 27 ] The December 10 memorandum closes with an invitation to direct any questions to, inter alia, Glen Yonekura in California.

[28] It is clear from this memorandum that the GEMBA Group et al. were well aware that improvements were being made to theCalgary I Lands and that they wanted construction work to continue. This evidence also confirms the connection to Blatz as thememorandum from the GEMBA Group et al. was delivered to Cooper of Master Mechanical by Blatz.

This evidence of an ongoingconnection between the GEMBA Group et al. and the Karmis Group was not effectively challenged by the GEMBA Group et al. duringthe hearing of this application. [29] Further, the GEMBA Group et al. were well aware of problems with financing, but nevertheless wanted construction tocontinue. This was happening at the same time as the transfer of title to the Calgary I Lands from Grand Riviera to MI Wuk was ongoingand which occurred after four of the lien claims had already been registered against title to the Calgary I Lands.

Notwithstanding thatthere were financing problems, the GEMBA Group et al. wanted the improvements to the Calgary I Lands to continue. This evidence isconsistent with the pending joint venture arrangement and shows that the GEMBA Group et al. were involved with the advancement ofthe Project through dealings with subcontractors such as Master Mechanical. [30] In

summary, there is evidence of connections between the sale of the Calgary I Lands and the commencement ofimprovements to that property through the involvement of Blatz, the evidence of awareness by the GEMBA Group et al. of work beingdone on the Calgary I Lands and the evidence of a concern that work might be delayed because of the failure by the Karmis Group tofinalize construction financing. This is all evidence of “active participation” and interest in the advancement of the Project by theGEMBA Group et al. This activity is not consistent with the role of a merely “passive investor”.

As suggested in Phoenix, supra, whenall of this evidence is examined it comes together to lead me to a conclusion that there was an “implied request” by the GEMBA Groupet al. that the work be done and materials be provided to improve the Calgary I Lands. [31] I am reinforced in this conclusion by a further observation in Acera where Berger, J.A. refers at para. 31 to a case from the Ontario Court of Appeal, Parkland Plumbing & Heating Ltd. v. Minaki Lodge Resort 2002 Inc., 2009 ONCA 256, 305 D.L.R. (4th) 577(Ont.

C.A.), paras. 67 - 68 to the effect that: The absence of direct dealings between the person said to be an owner under the Act and construction suppliers is only onefactor to consider in examining the relationship between the parties. It is not determinative. Were it otherwise, a developer couldeasily escape its obligations to suppliers by the simple device of arranging for an associated or related company to directly engagesuppliers for the provision of services or materials. This would defeat the intended protection provided to lien holders under theAct.

For this reason, the courts have recognized that a ‘request’ for work to be done may be inferred from the totality of thecircumstances, viewed in light of the substance of the relationship between the parties: Phoenix, at pp. 215-18; Cipriani, at p. 173;Northern Electric, at p. 769; Roboak, at pp. 203-04; Muzzo, at pp. 469-71; Orr v. Robertson (1915), (ON CA), 23D.L.R. 17 (Ont. C.A.), at p. 18. [Emphasis added] I take particular comfort from the statement that the absence of “direct dealings” between an owner and the construction suppliers is onlyone factor to consider. It is not determinative.

What is even more important is the observation in Parkland Plumbing, supra, that adeveloper should not be allowed to escape obligations to suppliers by a “simple device” such as the one in this case of sheltering behindthe notion of being a mere “passive investor” in a not quite formed joint venture.

It would be against public policy to allow a prospectivejoint venturer, such as the GEMBA Group et al., to escape responsibility in this case by saying it did not know, nor care, what went on inrespect to the Calgary I Lands when it clearly did care and was keeping an eye on the progress of the Project. [32] The circumstances here reveal an arrangement in the nature of a joint venture, which for one reason or another was notformally documented/consummated for a variety of reasons, eg. problems in finalizing construction financing, disagreements between theGEMBA Group et al. and the Karmis Group, etc.

However, these problems cannot be allowed to rebound to the prejudice of the LienClaimants who provided their work and materials in good faith. Nor can the GEMBA Group et al. distance themselves by now claimingthat they were simply a “passive investor” far removed from what was actually going on in respect to the construction of the Project onthe Calgary I Lands. [33] In

summary, there is evidence that the GEMBA Group et al. expected a benefit through improvements to the Calgary I Lands.Work was proceeding on the Project which the venturers had, in principle, agreed to. The fact is that this sort of arrangement is quitecommon in the land development and building industry in Alberta, where one party brings development expertise, e.g. zoning, approvalexpertise, arrangements with contractors, expertise in arranging financing, and the other party brings capital to the Project. That seems tobe a modern reality of land development and building in this Province.

[ 34 ] In the result, I am satisfied that there is sufficient evidence to establish involvement of the GEMBA Group et al. in the early stages of the construction of the Project and that evidence comes together to establish an “ implied request ” to do that work. [ 35 ] I turn now to the second question directed by Acera , namely whether the work done and materials furnished by the Lien Claimants accrued to the “direct benefit” of the GEMBA Group et al. In this case the builders’ liens filed by the Lien Claimants have all been proven, the work and materials were all provided and added to the Calgary I Lands.

I include in this statement the architectural services of MCA. There is no evidence that this work did not add value to the Calgary I Lands and no complaint is made about the quality of any of the services or goods provided. All of the work and materials were in the nature of permanent improvements.

I find that they added a value to the Calgary I Lands, of which Grand Riviera and MI Wuk were the registered owners during the relevant times. [ 36 ] In the result I find the work done and materials provided to the Calgary I Lands conferred a “direct benefit” to Grand Riviera and MI Wuk and had been impliedly requested by them. Based on these findings, I conclude that Grand Riviera/MI Wuk are an “ owner ” within the meaning of s. 1(

j) of the BLA . I now move on to deal with the MCA Lien, followed by the question of how the lien fund should be calculated and how the Laurentian Funds should be distributed.

(2) Is the MCA Lien valid, and if so, how much is it worth? (

a) Background to the MCA Lien [ 37 ] In November, 2005 MCA made a fee proposal to Suede Living for the provision of architectural services in respect to what ultimately became the Project constructed on the Calgary I Lands. The fee proposal was accepted by Suede Living and the proposal and acceptance together formed the Architectural Services Agreement (the “ASA”). [ 38 ] Pursuant to the ASA, MCA provided architectural services including the provision of plans and drawings for the Project, assistance and advice at the tendering stage and site inspection services.

The original total agreed fee for all architectural services under the ASA was $92,500.00, plus certain specified categories of disbursements. The fee portion of the ASA was modified to allow for a 15 % increase on the fee portion by a letter dated May 17, 2007 from MCA to Suede Living. That letter confirmed an oral agreement between Manu Chugh, the principal of MCA, and Alex Karmis of the Karmis Group. [ 39 ] Some MCA invoices were paid by Suede Living and the outstanding amount claimed is $37,413.89 (see

Summary of Invoices, dated June 25, 2008), Exhibit “G” to Affidavit of Manu Chugh, made August 4, 2008 (the “Manu Chugh Affidavit”), filed August 14, 2008 in Action No. 0801 06852 (the “Manu Chugh Action”). [ 40 ] The various sub-contractors on the Project stopped work in the latter part of December, 2007. At that time, Suede Living failed to pay invoices of MCA as they became due. Manu Chugh confirmed in his response to undertakings (filed) that December 20, 2007 was the date that MCA stopped work.

Recent services which had been provided by MCA included responding to inquiries from subcontractors on the site and inspections of the Project. On February 1, 2008 MCA registered the MCA Lien in the amount of $37,413.89 and a certificate of lis pendens was registered against title to the Calgary 1 Lands on June 11, 2008. [ 41 ] A Statement of Claim commencing the Manu Chugh Action was filed June 9, 2008 and was subsequently served on MI Wuk.

On July 30, 2008 MI Wuk filed a Statement of Defence and a Notice to Prove Lien which were served on MCA. [ 42 ] In response MCA, through its principal Manu Chugh, made the Manu Chugh Affidavit which was filed in Court on August 14, 2008. No specific response materials have ever been filed by MI Wuk in the Manu Chugh Action, although Glen Yonekura in the Yonekura Affidavit did make reference at paras. 33 and 34 thereof to the MCA Lien.

The position taken by Glen Yonekura is that the GEMBA Group et al. did not receive the benefit of any services from MCA, nor did they receive copies of architectural plans or drawings prepared by MCA.

[43] No further steps were taken in the Manu Chugh Action by any of the parties until July 14, 2011 when MCA filed anapplication to have the MCA Lien declared valid and sought payment of the amount owed under the MCA Lien from the LaurentianFunds. [44] On September 28, 2011 Park, J. ordered the MCA application be heard in Special Chambers on February 22 and 23, 2012 andthat the issues to be determined were, inter alia, the distribution of funds as between Tolosa, MI Wuk and the Lien Claimants, includingMCA. [45] On January 23, 2012 Yamauchi, J. made an Order consolidating the Manu Chugh Action with Action No. 0801 01987 andAction No. 0801 13202 for the purposes of the February 22 and 23, 2012 Special Chambers application. [46] On February 2, 2012 Manu Chugh was questioned on the Manu Chugh Affidavit.

A transcript of that examination was filedon February 13, 2012, but was only provided to me after I had heard argument on February 23. I received a copy of the Manu Chughresponse to undertakings arising from that February 2 questioning on November 15, 2012. (

b) Is the MCA Lien valid? [47] MCA must prove that the MCA Lien is valid and may do so through the

summary process provided for in s. 49(1)(6) of theBLA. [48] MI Wuk argues, inter alia, that it is not an “owner” within the meaning of the BLA, that the MCA Lien was not filed in atimely way, that the invoices filed in evidence in support of the MCA Lien lack detail, that certain charges such as those for ‘printing andcourier charges’ cannot constitute improvements to the Calgary I Lands and that the charges were generally not compliant with the termsof the ASA. [49] Needless to say, MCA does not agree with any of these assertions and I will deal with its responses in the course of myanalysis. [50] I have already decided that MI Wuk is an “owner” in respect to the Lien Claimants, including MCA.

Further, there is nodispute between MI Wuk and MCA that as a matter of law an unpaid architect can file a builders’ lien for architectural services. [51] However, one of the challenges raised by MI Wuk is that while an architect may register a builders’ lien under the BLA, theMCA Lien is somehow not valid because the services and related expenses, such as printing costs and courier charges, did not benefit theGEMBA Group et al. and MI Wuk in particular.

This is an issue over and above the timeliness of the registration of the MCA Lien. [52] The position by MI Wuk that no benefit was conferred on it misses the whole point about the nature of a builders’ lien which,of course, is related to the notion of improvements to land, not the creation of some sort of benefit to a stranger, or a non-contractingparty, such as MI Wuk. [53] The law in Alberta on this issue was made clear by the Alberta Court of Appeal in Peter Hemingway Architect Ltd. v. AbacusCities Ltd., 1980 CarswellAlta 266 where Clement, J.A. for the Court stated at para. 6 of that decision: ...

Speaking in general terms, architectural services performed in relation to an improvement are work "upon or in respect of animprovement" within s. 2(1)(1) and s. 4(1)(

a) of the Act for which a lien may be claimed: Hett v. Samoth Realty Projects Ltd.(1977), (AB CA), 3 Alta. L.R. (2d) 97 at 105, 1 R.P.R. 257, 76 D.L.R. (3d) 362, 4 A.R. 175 (C.A.). In its relevantterms the Act provides:

(1) A lien in favour of a contractor or a sub-contractor 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 within 35 days after completion or abandonment....

(3) A lien for the performance of services may be registered at any time during the performance of the services and within 35 days after the performance of the services is completed. Services were in fact being performed up until the date of the registration of the claim for lien, and on or about that time Abacus abandoned the contract under which they were being performed.

The services had been continuous and there was much yet to be performed: there had been no break or hiatus in fact or under the terms of the contract which would require compartmentalization for the purposes of s. 30 and resulting differences in the computation of time. When a valid lien for the whole of such services can be maintained, it is irrelevant that a claim is made only for a part. This point, which is in general terms, must be resolved in favour of the appellant. [Emphasis added.] [ 54 ] The reference by Clement, J.A. to “s. 4(1)(

a) of the Act ” is a reference to a provision in the Builders ’ Lien Act, R.S.A. 1970 which equates to s. 6(1) of the BLA, which now reads: Creation of lien 6(1) Subject to subsection (2), a person who (

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

b) furnishes any material to be used in or in respect of an improvement, for an owner , contractor or subcontractor has, for so much of the price of the work or material as remains due to the person, a lien on the estate or interest of the owner in the land in respect of which the improvement is being made . [Emphasis added.] As can be seen from the statement of Clement, J.A. in Hemingway , supra, “architectural services performed in relation to an improvement are work ‘upon or in respect of an improvement’” (now stated in s. 6(1)(

a) of the BLA to be “on or in respect of an improvement”) and in this case give rise to the MCA Lien against the Calgary I Lands. I find that the MCA Lien for architectural services is a valid lien. [ 55 ] Further, I find that the services rendered by MCA added value to the Project on the Calgary I Lands. The plans prepared by MCA provided the basis for applications for development and building permits for the Project which were issued by the development authority.

The issuance of development and building permits adds value to lands and I specifically find that to be the case in respect to the plans prepared by MCA, which added value to the Project on the Calgary I Lands. I find that these plans guided the work of the Lien Claimants who did work and provided materials on or to the Calgary I Lands. Other services provided by MCA, such as assistance in finalizing bid packages, advice and negotiations with contractors and site inspections also added value to the Calgary I Lands and the Project.

[ 56 ] Resolution of the timeliness of registration of the MCA Lien requires an examination of the circumstances of the case, including the terms of the ASA, all in the context of s. 41 of the BLA , which deals with the time for registering a builders’ lien. Part of that

section reads: 41(2) A lien for the performance of services may be registered at any time within the period commencing when the lien arises and (

a) subject to clause (b), terminating 45 days from the day that the performance of the services is completed or the contract to provide the services is abandoned, or ... [Emphasis added.] [ 57 ] Two approaches to resolving this issue arise on the law stated in s. 41(2)(

a) of the BLA . [ 58 ] Insofar as the performance of architectural services are concerned, there is evidence from MCA that it worked up to December 20, 2007. The time for lien registration is to be measured from this date and that would also be consistent with the provisions of the ASA. The MCA Lien was filed on February 1, 2008, which is inside the 45 day period provided by the BLA , and I so find. [ 59 ] The ASA provided for a continuing array of services to be delivered by MCA in a phased way.

These architectural services continued to be provided under the ASA until it became apparent to MCA that its invoices were not being paid by Suede Living. The ASA provides for fee payments for different phases or stages of work. In addition, there was a modification to the ASA which allowed for a 15 % increase in the original contract price of $92,500.00 for fees. This increase is calculated by multiplying 15 % x $92,500.00 yielding the increased fee of $13,875.00.

This is the amount reflected in the last invoice found as Exhibit “G” to the Manu Chugh Affidavit. [ 60 ] The other approach which may be taken here is to measure the time for registration of the MCA Lien from the date of abandonment of the ASA by Suede Living. Counsel for the GEMBA Group et al. conceded during oral argument that this contract was abandoned by Suede Living on December 20, 2007.

From a factual point of view, this is similar to what happened in Hemingway , supra , where the developer, Abacus, abandoned the contract. (See the highlighted portion of the second full paragraph of Hemingway , supra ). [ 61 ] Keeping in mind that observation by Clement, J.A. in Hemingway and the concession by counsel for the GEMBA Group et al., I find that Suede Living, as the developer, abandoned the ASA on December 20, 2007 and that the time for registering a lien by MCA started to run from that date. There was no requirement in the ASA that payments could not be made until completion of that contract.

The ASA provided for payments by installments and were geared to certain phases. Seven invoices had already been paid by Suede Living to MCA before default occurred. (See Exhibit “G” to the Manu Chugh Affidavit, being a letter of July 25, 2008). In these circumstances, MCA is entitled to enforce the MCA Lien, s. 55(1) of the BLA . [ 62 ] MI Wuk argues that the case of charges for ‘ printing and courier expenses ’ were incurred between June and March 2007 and the MCA builders ’ lien was not filed until February 1, 2008, well beyond the 45 day period provided for in s. 41 of the BLA.

It also complains of a lack of detail in respect to some of the invoices for fees which were issued to Suede Living after February 1, 2008. [ 63 ] As already noted, the ASA provides for the continuous provision of services through a number of phases. These services were still being provided when default occurred on December 20, 2007.

There is no doubt that the expenses of ‘printing and courier charges’ were incurred by MCA in relation to copying plans, delivering plans, etc., all core functions to be performed by MCA. [ 64 ] While MCA may have been somewhat dilatory in issuing invoices which may have lacked some detail, there is no evidence that these services were not provided, or that these costs were not incurred in the course of rendering architectural services. Indeed, Suede Living had already paid seven invoices without apparent complaint prior to the time of default.

Therefore, I conclude that the MCA builders’ liens were registered in a timely way; valuation of the MCA Lien is a separate issue.

(

c) How much is the MCA Lien worth? [ 65 ] The challenges made by MI Wuk to the value of the work covered by the MCA Lien were blended into its argument about the timeliness of registration of the MCA Lien. I will now attempt to disentangle these blended arguments. [ 66 ] The value of the work covered by the MCA Lien is a question of fact and requires an examination of the evidence in the record. Here the evidence consists of the MCA Affidavit, including the invoices and summaries of invoices attached as Exhibits to that Affidavit.

Other evidence consists of the Questioning on that Affidavit (filed) and the responses to undertakings of Manu Chugh (filed). [ 67 ] Because the value of the MCA Lien is challenged, the onus is on MCA as the lien claimant, to prove the value for the MCA Lien. [ 68 ] The evidence of MCA, through its principal in the Manu Chugh Affidavit, is that the amount claimed in the MCA Lien is $37,413.89. [ 69 ] This sworn statement is backed up by the invoices and summaries attached to the Manu Chugh Affidavit.

Those invoices were challenged by the GEMBA Group et al. and I now review them one-by-one and make specific findings in respect to each of them. (

i) Exhibit “B ” - Invoice dated December 18, 2007 [ 70 ] This invoice states that it relates to ‘Phase II - Construction Procurement, $8,250.00. 100% = $8,250.00' and the invoice amount includes GST, for a total of $5,437.64. [ 71 ] This invoice relates to the ‘Phase II’ fee provided for in the ASA. Counsel for MI Wuk did not dispute that, rather her complaint was that the invoice lacked detail and it was impossible to determine when this work had been done. This is a timeliness issue which has already been dealt with.

On the lack of detail argument, the nature of the services provided are ascertainable by reference to the ASA and also through the explanations offered by Manu Chugh in the course of his Questioning on his Affidavit. [ 72 ] In the result, I find that this fee amount, plus GST, was properly charged for under the ASA and is covered by the MCA Lien. (ii) Exhibit “C ” - Invoice dated January 15, 2008 [ 73 ] This MCA invoice was for ‘Printing and Courier Charges (June 2007/November of 2007)’ in the amount of $5,178.70, plus GST, for a total of $5,437.64. [ 74 ] These charges relate to copying and delivery charges in respect to drawings.

These expenses were incurred by MCA in the course of providing architectural services. I have found that the provision of such services relates to an improvement and gives rise to a valid lien. [ 75 ] I find that this is a proper charge under the ASA and is covered by the MCA Lien.

(iii) Exhibit “D ” - Invoice dated June 25, 2008 [ 76 ] This invoice was issued by MCA for ‘Fee now due as per our contract dated November 8, 2005’ for $8,250.00, plus GST, for a total of $8,662.50. [ 77 ] The challenge to this invoice and to the one included as Exhibit “E” are that they lack detail and were out of time. [ 78 ] This billing appears to relate to a charge for the balance of the $92,500.00 payable in fees by Suede Living to MCA as provided for in the ASA. I have found that Suede Living abandoned the contract on December 20, 2007.

MCA was entitled to the full amount of the fees under the abandoned ASA as at that date. [ 79 ] I find that this fee amount, plus GST, was properly charged for under the ASA and is covered by the MCA Lien. (iv) Exhibit “E ” - Invoice dated June 28, 2008 [ 80 ] This invoice covers ‘Additional Services Fee as per our May 17, 2007 Letter.

Revision to Contract, $92,500.00 x 15% for $13,875.00 in additional fees, plus GST, for a total invoice amount of $14,568.75.’ [ 81 ] These charges represent the 15 % increase in fees agreed to by Suede Living as documented in the Letter of May 17, 2007. (Exhibit “ F ” to the Manu Chugh Affidavit.) This 15 % increase was based on the agreed fees for services of $92,500.00 as stated in the ASA.

Most of the fees on which this 15 % increase was calculated had already been charged and, in some cases, paid for. (Exhibit “ G ” to the Manu Chugh Affidavit.) [ 82 ] Since the ASA had been abandoned by Suede Living, MCA was entitled to the previously agreed to increase for the same reasons that I have expressed in respect to the other invoice of the same date, namely Exhibit “D”. [ 83 ] I find that this increased fee was a proper charge under the ASA and is covered by the MCA Lien. [ 84 ] These four invoices amount to $37,413.89 in fees and GST.

This is the amount of the MCA Lien and the amount was obviously contemplated by and calculated by MCA before registration of the lien on February 1, 2007. In conclusion, I find the value of the MCA Lien to be $37,413.89. [ 85 ] In

summary, I find the MCA Lien to be a valid builders’ lien and I declare the value of the MCA Lien to be $37,413.89, exclusive of interest and costs.

(3) How should the lien fund be calculated and distributed in this case? If a lien fund cannot be determined, then on what basis should the Laurentian Funds be distributed, if at all? [ 86 ] The issue put to the Court by the parties was how the lien fund should be calculated and distributed in these circumstances. However, a further issue arises which must also be determined and that is, if the BLA does not provide for the creation of a lien fund in these circumstances, do the Lien Claimants nevertheless have access to the Laurentian Funds and if so, on what basis and how should those monies be distributed?

[ 87 ] I begin my analysis in respect to these questions by providing a brief

summary of the positions of the parties on the question of calculating the lien fund and the distribution of the Laurentian Funds. As far as the GEMBA Group et al. are concerned, the lien fund is limited to a maximum of 10% of the total value of the proven lien claims of the Lien Claimants (excluding interest and costs), and would amount to $64,383.81. That amount includes 10% of the now proven MCA Lien in the amount of $3,741.39.

The GEMBA Group et al. appear to concede that if any one of them is found to be an “owner” within the meaning of the BLA that the Lien Claimants are limited to a lien fund in the amount so stated. [ 88 ] Con-Forte takes the position that the lien fund should be calculated pursuant to s. 18 of the BLA as a percentage of the value of the work actually done or materials actually furnished. It relies on the principles stated in C.J. Oliver Ltd. v. Foothills Lighting and Electric ((1965), 54 DLR (2d) p. 272, Alta SCAD).

Con-Forte asserts that the method for calculating the value of the work actually done or materials actually furnished is to assess the value of all of the work done on the Calgary I Lands. It says that the valuation of work done and materials furnished cannot be determined by the value of the contract with a general contractor, nor can it be determined by the cost of the work to complete the contract if abandoned.

Instead, it argues that the lien fund should be based on the value of the work performed and materials provided and points to the overall value of the various liens filed, but not necessarily proven and amounting to $2,122,260.34. That is said to be evidence of the work actually done and the materials actually furnished.

When multiplied by 10% that would yield a holdback figure of $212,226.03. [ 89 ] In its written brief Dynamic states that the Laurentian Funds represent the replacement of an interest in the Calgary I Lands and that the Lien Claimants are entitled to enforce their encumbrances against those funds in the full amount of the proven liens. [ 90 ] The Master Mechanical argument in respect to the value of the major lien fund takes, as a starting point, s. 4(

b) of the BLA , which provides that where there is no specific contract price, then the valuation exercise must be based on the actual value of work and materials provided. Counsel derived from the Affidavit evidence provided by Richard Gariepy an amount for work and materials totalling $926,500.05, which when added to a value for proven liens of $606,644.42 (excluding a value of the MCA Lien) results in a total value of work and materials provided to the Project of $1,532,924.50.

This figure should then be multiplied by the mandated holdback figure of 10%, yielding a sum of $153,292.45, which should then be subtracted from the total value of the proven liens ($606,644.42 - $153,292.45 = $453,131.00). It was then suggested that this amount should be added back in with the 10% holdback figure, the result being an amount of $606,424.25 as representing the value of the major lien fund.

Master Mechanical closed its argument by pointing out that the Laurentian Funds stands in the stead of the Calgary I Lands and the claim of the Lien Claimants is in the nature of an in rem claim against these funds. [ 91 ] In these circumstances there are two alternative pathways for the Lien Claimants to reach the Laurentian Funds. One approach is to determine a value for the lien fund and then use the distribution process provided for in the BLA to distribute that lien fund between the Lien Claimants. The other pathway to the Laurentian Funds is based on the proven liens amounting to $643,836.34 in value.

The proven liens of the Lien Claimants constitute encumbrances within the meaning of s. 1 (

e) of the Land Titles Act, RSA 2000, c L-4 ( “ The Land Titles Act ” ). These encumbrances were registered against title to the Calgary I Lands prior to being cleared from title by the Order of Master Waller, on January 18, 2010 (the “ Waller Order ” ). While all of these liens were removed from the title of the Calgary I Lands by the Waller Order, they were not, in any way, extinguished. The Laurentian Funds represent the land interest in the Calgary I Lands and the encumbrances represented by the liens may be enforced against the Laurentian Funds. (

a) Calculation of the lien fund and distribution under the BLA [ 92 ]

Section 1(

g) of the BLA defines a ‘lien fund’ as the major lien fund, the minor lien fund or both the major lien fund and the minor lien fund. [ 93 ] The term ‘major lien fund’ is defined in s. 1(1)(

h) of the BLA as: where a certificate of substantial performance is not issued, the amount required to be retained under section 18(1) or (1.1) plus any amount payable under the contract. [Emphasis added.] This provision applies because no certificate of substantial performance was issued. Instead, the developer Karmis Group, including

Eagle Hill and Suede Living, abandoned all contracts and subcontracts. [ 94 ]

Section 25(

b) of the BLA limits the liability of the owner of land to a lien holder to the major lien fund in the instance where a minor lien fund does not arise under

section 23. Here there is no minor lien fund and therefore, pursuant to s. 24(2) of the BLA, any builders’ lien arising from the work done or materials furnished to the Project is a charge on the major lien fund. [ 95 ]

Section 18 of the BLA provides the mechanism for determining the ‘major lien fund’: 18(1) Irrespective of whether a contract provides for instalment payments or payment on completion of the contract, an owner who is liable on a contract under which a lien may arise shall , when making payment on the contract, retain an amount equal to 10% of the value of the work actually done and materials actually furnished for a period of 45 days from (

a) the date of issue of a certificate of substantial performance of the contract, in a case where a certificate of substantial performance is issued, or (

b) the date of completion of the contract, in a case where a certificate of substantial performance is not issued. ...

(2) In addition to the amount retained under subsection (1) or (1.1), the owner shall also retain, during any time while a lien is registered, any amount payable under the contract that has not been paid under the contract that is over and above the 10% referred to in subsection (1) or (1.1). [Emphasis added] [ 96 ] Here the contracts were between Eagle Hill and six of the seven Lien Claimants, which were subcontractors. All of these subcontracts were abandoned by Eagle Hill and could not be completed. Obviously no certificates of substantial performance could be issued. In this situation s. 4(

b) of the BLA applies: 4 For the purposes of this Act, the value of the work actually done and materials actually furnished shall be calculated on the basis of ... (

b) the actual value of the work done and materials furnished, if there is not a specific contract price . [Emphasis added.] [ 97 ]

Section 4(

b) of the BLA applies to value the work for the six subcontractors because there is no contract price available here.

Therefore, the actual value of the work done and materials furnished shall be used as a proxy to determine the lien fund in respect to these Lien Claimants. [ 98 ] In the case of MCA, there is a contract price which has been determined as at the date of abandonment and a lien has been proven in the amount of $37,413.89, exclusive of interest and costs. [ 99 ] The major lien fund consists of 10% of the value of the work actually done and the materials actually furnished, plus amounts payable under the contracts that had not been paid when they were abandoned by Eagle Hill and Suede Living.

I have decided that the Lien Claimants are entitled to make claims in this situation. In keeping with the

summary process mandated in s. 49(6) of the BLA for determining claims, I find that the value of the work and materials provided, but not paid for, is represented by the value of the proven

liens in the total amount of $643, 836.34. There is no need in these circumstances to go through the 10% calculation exercise because that amount would just be added back into the total in any event; nor is it necessary to create a separate lien fund for MCA in these circumstances either. In the result, I determine and declare that the lien fund shall be the sum of $643,836.34. [ 100 ] Having determined a value for the lien fund through the proxy of the value of the proven liens, then s. 18(6)(

b) of the BLA requires that:

(6) If a contractor defaults in completing the contractor’s contract, the major lien fund ... (

b) when distributed, shall be distributed in the manner prescribed by

section 61 . [Emphasis added.] [ 101 ]

Section 61 of the BLA provides that: 61(1) When a mortgage or other registered encumbrance is prior to a lien under this Act, the court may order that in a sale under this Act (

a) the property be sold subject to the mortgage or encumbrance , or ... [Emphasis added.] [ 102 ] In this case the sale of the Calgary I Lands appears to have been driven by the first mortgagee, Laurentian, which foreclosed on its mortgage and made application to Master Waller who issued the Waller Order. [ 103 ] The

preamble to the Waller Order notes that all encumbrancers (which includes the Lien Claimants) had been served. The Waller Order did not extinguish or quash the liens of the Lien Claimants in any way. It provided for the cancellation of the existing certificate of title to the Calgary I Lands in the name of MI Wuk and directed the issuance of a new certificate of title, subject to a number of specified registered encumbrances, but free from the Laurentian Mortgage and all of the subsequent encumbrances including the liens registered by the Lien Claimants.

Paragraph 7 of the Waller Order notes that any interest in the “Property of the Defendant”, i.e. MI Wuk was extinguished. That may be sufficient to answer any claims by MI Wuk to the Laurentian Funds which were ordered paid into Court by para. 8(

h) of the Waller Order. However, I do not decide this case on that basis. [ 104 ] The sale of the Calgary I Lands could also be a sale under the BLA , even though the party which made the application leading to the sale of the Calgary I Lands was the first mortgagee, Laurentian.

Indeed, some of the Statements of Claim in the actions of the Lien Claimants and specifically the Con-Forte Action, ask that in default of payment of claims that the Calgary I Lands be sold pursuant to the BLA and that the proceeds be applied in payment of the Con-Forte claim. [ 105 ] In addition, here there were prior encumbrances which are reflected in para. 6 of the Waller Order, where he states that the new title would be subject to existing encumbrances on the MI Wuk title, namely: (

a) Bank of Montreal, registered as Instrument No. 011 216 883; and (

b) Caveat registered as Instrument No. 021 007 527. Therefore, this was a sale which recognized that prior encumbrancers were to be carried forward to the new title and as such falls within s.61(1)(

a) of the BLA as set out above.

[ 106 ] With these observations in mind, I declare that the sale authorized by Master Waller in the Waller Order was a sale under s. 61(1)(

a) of the BLA . In that Order Master Waller directed the proceeds of sale be paid into Court and those monies are now the Laurentian Funds. [ 107 ] Given my determination that this was a sale under s. 61(1)(

a) of the BLA , the Laurentian Funds shall be distributed in accordance with s. 61(3)(

a) and (

c) of the BLA: 61(3) When a sale is made pursuant to subsection (1)(a), the money in court shall be distributed in the following order: (

a) in paying the costs of those parties to whom costs have been awarded by the court (

i) of and incidental to the proceedings, and (ii) of registering and proving the liens; ... (

c) in paying the several amounts owing to lienholders other than the contractor. ...

(5) Each class of lienholders, as between themselves, rank without preference for their several amounts and the portion of the money available for distribution to each class shall be distributed among the lienholders in that class . [Emphasis added.] [ 108 ] Pursuant to s. 61(5) of the BLA , I declare that the Lien Claimants are entitled to a distribution of the Laurentian Funds in proportion to the amount of their respective proven liens. (

b) Distribution as encumbrances enforceable against the Laurentian Funds [ 109 ] As an alternative to calculating and distributing a lien fund under the BLA , there is another approach which is to treat the liens as “encumbrances” enforceable against the Laurentian Funds. [ 110 ] All of the proven liens of the Lien Claimants qualify as “encumbrances” as that term is defined in s. 1(

e) of the Land Titles Act which reads: 1(e) “encumbrance” means any charge on land created or effected for any purpose whatever, inclusive of ... builders ’ liens ... [ 111 ] MI Wuk took title to the Calgary I Lands subject to the builders’ liens of four of the Lien Claimants, namely Con-Forte, Custom Electric and Keystone Excavating and Global which have proven liens totaling $472,261.17, excluding judgment interest and costs.

Section 58(1) of the Land Titles Act applies to fix MI Wuk with responsibility to honour these four encumbrances. [ 112 ] The other Lien Claimants, namely Dynamic, Master Mechanical and MCA registered their builders’ liens against title to the Calgary I Lands after December 20, 2007. This group of Lien Claimants have proven liens totaling $171,577.17, exclusive of interest and costs. I have found that the transfer of title from Grand Riviera to MI Wuk was not an arms length transaction and I also find that MI Wuk was at all times a volunteer.

[ 113 ] Section 60(1) of the Land Titles Act does not apply in this situation because MI Wuk knew, or should have known, that there were lien claims likely to be registered. Further, and in any event, the liens of Dynamic, Master Mechanical and MCA existed as unregistered claims for 45 days from the last day of work until registered.

Therefore, I find MI Wuk took title subject to these three encumbrances as well. [ 114 ] All of the Lien Claimants have proven their liens and all of those liens were on title as encumbrances at the time Master Waller made his Order. [ 115 ] Master Waller directed the issuance of a new title without the presence of the encumbrances of the Lien Claimants. However, the Waller Order did not extinguish or quash any of the builders’ liens/encumbrances of the Lien Claimants.

He made no determination on the merits in relation to these liens and they continue to exist as claims against the Laurentian Funds. [ 116 ] Master Waller also directed in para. 8(

h) of his Order that the balance of funds arising from the sale would be paid to the Clerk of the Court and these are the Laurentian Funds. The Laurentian Funds were created from the forced sale of the Calgary I Lands and stand as a substitute for the previous land interest of MI Wuk. The claim of the Lien Claimants through these encumbrances is a claim in rem .

The Lien Claimants no longer had any interest in the title to the Calgary I Lands, but still have a right to enforce their encumbrances against the Laurentian Funds. [ 117 ] I find that the Lien Claimants, as encumbrancers, are entitled to share and shall share the Laurentian Funds in proportion to the value of their respective proven liens and I so declare.

(4) Are any of the other encumbrancers entitled to any of the Laurentian Funds? [ 118 ] The GEMBA Group et al. had raised this issue in respect to its application to declare the lien claims of Nixious Investments Inc. (“Nixious”), Rocky Cross Construction (North) Inc. (“Rocky Cross”), MCA and Eagle Hill to be invalid, or alternatively that those lien claimants had no right or entitlement to the Laurentian Funds.

I have found that the MCA Lien is valid and I have declared a value for that lien of $37,413.89. [ 119 ] The other claims referred to as being made by Nixious, Rocky Cross and Eagle Hill have not been pursued and no one appeared on their behalf at the Special Chambers hearing on either February 22 or 23, 2012. [ 120 ] Those builders’ liens were encumbrances within the meaning of that term as defined in the Land Titles Act . However, none of these parties have sought to prove their liens, or enforce their claims against the Laurentian Funds.

Accordingly, as I did with Ulysses in the Tolosa judgment, I also find the claims of these parties to be invalid and that these claimants, if they were claimants, have no entitlement to any part of the Laurentian Funds. V. Conclusion [ 121 ] I make the following declarations: (

a) Grand Riviera and MI Wuk are an “owner” of the Calgary I Lands within the meaning of s. 1(

j) of the BLA ;

(

b) The MCA Lien is valid and has a value of $37,413.89, exclusive of interest and costs; (

c) The sale of the Calgary I Lands authorized in the Waller Order is deemed to be a sale under the BLA ; (

d) The value of the lien fund is $643,836.34 and the Lien Claimants shall receive payment from the Laurentian Funds in proportion to the amount of their proven lien claims, plus recalculated judgment interest and costs; (

e) The Lien Claimants, as encumbrancers, may enforce their proven liens against the Laurentian Funds by receiving payment from those funds in proportion to the amount of their proven lien claims, plus recalculated judgment interest and costs; (

f) The Lien Claimants are entitled to costs on an individual basis and interest at the judgment interest rate, to be recalculated on the amount of their respective proven liens from the date of issuance of their respective Statements of Claim, to the date that funds are paid out of Court from the Laurentian Action; (

g) In respect to the costs of MCA in proving its lien, it shall be entitled to costs against the GEMBA Group et al. in triple the applicable column; and (

h) The builders ’ lien claims of Nixious, Rocky Cross and Eagle Hill are declared to be invalid and these parties have no claim or entitlement to the Laurentian Funds. [ 122 ] I reserve jurisdiction on the question of resolving all disputes which may arise in respect to determining the amount of interest and costs in favour of the Lien Claimants and payment out of the Laurentian Funds in the appropriate amount.

If the parties cannot agree on all issues within 30 days of the issuance of this judgment, then all outstanding disputes shall be the subject of the exchange of written submissions with all such submissions to be filed with the Court within 60 days of the issuance of this judgment. Heard on the 22 nd and 23 rd days of February, 2012. Dated at the City of Edmonton, Alberta this 29 th day of November, 2012. D.R.G. Thomas J.C.Q.B.A. Appearances: Mr. Glen Hickerson (Wilson Laycraft) for Con-Forte

Mr. Martin J. Arkell (Martin J. Arkell Professional Corporation) for Dynamic Concrete Pumping Mr. Philip Biggar (Goodfellow Law Firm) for Master Mechanical Mr. Peter R. S. Leveque (Brownlee LLP) for MCA Mr. B. Adam E. Brener (Leon Bickman Brener) for Keystone Excavating Ms. Kelsey J. Drozdowski (Bennett Jones LLP) for Grand Riviera and MI Wuk Mr. Rod Onoferychuk (North Calgary Legal Centre) for Tolosa Development Corp.

SCHEDULE “ A ”

Definitions: Lien Claimants include/means: Con-Forte, Custom Electric Ltd., Keystone Excavating, Global Engineering, Dynamic Concrete Pumping, Master Built Mechanical and Manu Chugh Architect, CLP means Certificate of Lis Pendens Lien Claimants Proven Lien Amount Builders ’ Lien Instrument No. Lien Registration Date Action No. and Certificate of Lis Pendens ( “ CLP ” ) Registration Date and No. where available

Con-Forte Contracting Limited Partnership, by its general partner Con-Forte Contracting Group Inc. ( “ Con-Forte ” ) $407,838.34 Order of Master Laycock, filed July 11, 2011 071 612 413 20/12/2007 Action # 0801-01987 CLP registered 25/02/2008 Custom Electric Ltd. ( “ Custom Electric ” ) $13,568.00 plus judgment interest of $1,222.78 exclusive of costs Order of Master Hanebury filed July 26, 2011 071 612 065 20/12/2007 Action # 0801-04082 CLP registered 11/04/2008 Keystone Excavating Ltd. ( “ Keystone Excavating ” ) $47,360.54 plus judgment interest of $4,299.07 exclusive of costs Order of Master Hanebury filed July 26, 2011 071 613 671 21/12/2007 Action # 0801-04940 CLP registered 30/04/2008 Global Engineering and Testing Ltd. ( “ Global ” ) $3,494.29 Order of Master Laycock, filed June 15, 2011 071 613 944 21/12/2007 Action # 0801-07096 CLP registered 16/06/2008 Dynamic Concrete Pumping Inc. ( “ Dynamic ” ) $32,302.28 plus judgment interest of $2,902.36 exclusive of costs.

Order of Master Hanebury, filed July 26, 2011 081 004 169 39507 Action # 0801-15242 CLP registered 20/03/2008 Lien Claimants Proven Lien Amount Builders ’ Lien Instrument No. Lien Registration Date Action No. and Certificate of Lis Pendens ( “ CLP ” ) Registration Date and No. where available

Master Built Mechanical Contracting Ltd. ( “ Master Mechanical ” ) $101,861.00 exclusive of interest and costs. Order of Master Laycock filed June 23, 2011 081 012 536 39691 Action # 0801-07959 CLP registered 07/07/2008 Manu Chugh Architect Ltd. ( “ MCA ” ) $37,413.89, exclusive of interest and costs Decision/ Order of Thomas, J. November 29, 2012 081 044 547 39448 Action # 0801 06852 CLP No. 0801 207 382 - registered 11/06/2008 Lien Claimants Proven Lien Amount Builders ’ Lien Instrument No.

Lien Registration Date Action No. and Certificate of Lis Pendens ( “ CLP ” ) Registration Date and No. where available _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice D.R.G. Thomas _______________________________________________________ The judgment has been changed in the style of cause for Action No. 0801 04082 to read: And Between: 0801 04082 Custom Electric Ltd. Plaintiff/Applicant v. Eagle Hill Developments Ltd.

MI Wuk Holdings I, ULC Defendants/Respondents