2013 ABQB 41, 2013 ABQB 41

Court of Queen ’ s Bench of Alberta Citation: MCAP Service Corporation v. Anthony Plaza II, ULC, 2013 ABQB 41 Date: 20130117 Docket: 0801 13433, 0801 00972, 0801 07095, 0801 07960, 0801 09229, 0801 12497 Registry: Calgary

Docket: 0801 13433 Between: MCAP Service Corporation Plaintiff - and - Anthony Plaza II, ULC Defendant Docket: 0801 00972 And Between: Nixious Investments Inc. Plaintiff - and - Anthony Plaza II, ULC, Calgary II Grand Park, ULC, John Doe1, John Doe 2, John Doe 3 and John Doe 4 Defendant

Docket: 0801 07095 And Between: Global Engineering and Testing Ltd. Plaintiff - and - Eagle Hill Developments Ltd., Ulysses Development Corp., Calgary II Grand Park, ULC and Anthony Plaza II, ULC Defendants Docket: 0801 07960 And Between: Master Built Mechanical Contracting Ltd. Plaintiff - and - Eagle Hill Developments Ltd., Anthony Plaza II, ULC, Calgary II Grand Park, ULC and Ulysses Development Corp. Defendants Docket: 0801 09229 And Between: Eagle Hill Developments Ltd. Plaintiff

- and - Anthony Plaza II, ULC and Calgary II Grand Park, ULC Defendants Docket: 0801 12497 And Between: Ulysses Development Corp. and Alex Karmis Plaintiffs - and - Anthony Plaza II, ULC, Calgary II Grand Park, ULC, Duke Capital Partners LLC, Gemba Fund One LLC, Gemba Fund Two LLC, Glen Yonekura, and John Doe 1, John Doe 2, John Doe 3, and John Doe 4 Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr.

Justice Hall _______________________________________________________ [ 1 ] Application is made by various builder ’ s lien registrants to have their liens declared valid, to be valued, and to set the amount of the major lien fund. A cross-application is made by Calgary II Grand Park, ULC ( “ Grand Park ” ) and Anthony Plaza II, ULC ( “ Anthony Plaza ” ) who are the former owners of certain lands located in the City of Calgary which are referred to by the parties as the “ Calgary II Lands ” . Those lands were purchased by Grand Park, which was in turn owned by the GEMBA Group, a group of California investors.

Later, when development for the Calgary II lands came into distress, Grand Park sold the lands to Anthony Plaza II, which is again a corporation wholly owned by the GEMBA Group. [ 2 ] The GEMBA Group caused Grand Park to purchase the subject lands from a vendor. An arrangement was reached with one Alex Karmis and his companies ( “ the Karmis Group ” ) whereby the GEMBA Group would cause Grand Park to purchase the Calgary II Lands, the Karmis Group was to develop the Calgary II Lands at its cost, and the profits of the development would be split equally between the the GEMBA Group and the Karmis Group.

A draft joint venture agreement was prepared for these purposes, however it was never executed by the parties. [ 3 ] The Karmis Group failed to complete the development of the Calgary II Lands and failed to pay contractors who have

[ 3 ] The Karmis Group failed to complete the development of the Calgary II Lands and failed to pay contractors who have provided their services towards the development of the Calgary II Lands. As a result, various builder ’ s liens and caveats were registered against the Calgary II Lands. A mortgagee, MCAP Service Corporation ( “ MCAP ” ), took foreclosure proceedings in relation to the Calgary II Lands, and the Court approved sale of the Calgary II Lands through the foreclosure procedure.

Once the foreclosure was concluded, the balance of the proceeds of sale of the Calgary II Lands, in the amount of $440,199.65, was paid into Court. [ 4 ] The actions with which this judgment is concerned are sister actions to the group of actions cited as Con-Forte Contracting Limited Partnership v. Eagle Hill Developments Ltd., 2012 ABQB 724 , a recent decision of Thomas, J. of this Court.

That decision involved most of the same parties as are involved herein, involved most of the same issues as are to be decided herein, and most of the same or similar affidavit evidence as was filed herein, except that the decision relates to what are known as the “ Calgary I Lands ” . Most of the facts in that decision are identical to the facts in the matter before me, and the issues arising therein arise in this matter.

In that group of actions, a number of the builder ’ s liens had already been proven, whereas here, the validity and amount of the liens filed against Calgary II Lands must be decided by me. [ 5 ] I have had the benefit of reviewing the Reasons for Judgment of Justice Thomas respecting the Calgary I lands.

While those Reasons are not binding on me, I find them to be most persuasive. [ 6 ] The liens to be considered herein have been filed by the following parties in the following actions: Nixous Investments Inc. 0801-00972 North American Caisson Ltd. 0801-04939 Keystone Excavating Ltd. 0801-06822 Global Engineering and Testing Ltd. 0801-07095 Master Built Mechanical Contracting Ltd. 0801-07960 Manu Chugh Architect Ltd. 0801-06853 Eagle Hill Developments Ltd. 0801-09229 Rocky Cross Construction (North) Ltd. No action filed and no COPL registered [ 7 ] Certain of these matters can be disposed of summarily.

The claim of Nixous Investments Inc. has not been supported by any documentation or affidavit evidence that it provided services in respect of the lands. The representative of the GEMBA Group, Mr. Yonekura has sworn evidence that he is unaware of any services provided by Nixous Investments Inc. Nixous Investments Inc. has not appeared before this Court. The Nixous lien is declared to be invalid. [ 8 ] Eagle Hill Developments Ltd. has not filed any evidence in support of its builder ’ s lien claim. Its principal, Mr.

Ken Blatz has given evidence that Eagle Hill Development Ltd. does not intend to pursue its builder ’ s lien claim, and it has not done so. The lien claim of Eagle Hill Development Ltd. is declared to be invalid. [ 9 ] Rocky Cross Construction (North) Ltd. has never filed a Certificate of Lis Pendens in relation to its builder ’ s lien claim, which was registered on October 28, 2008. As such, its lien has ceased to exist. It is declared invalid.

[10] Global Engineering & Testing Ltd. has not participated and has filed no application or evidence. Its lien is declared to beinvalid. [11] I will return to the remaining builder’s lien claims individually once I have ruled upon the general positions taken by theparties. Who is an Owner Under the Builder’s Lien Act? [12] Anthony Plaza II, wholly owned by the GEMBA Group, purchased the Calgary II Lands from Grand Park, also whollyowned by the GEMBA Group.

Anthony Plaza was the registered owner of the Calgary II Lands until those lands were foreclosed upon.Anthony Plaza maintains that neither it nor Grand Park is an owner pursuant to the Builder’s Lien Act (“BLA”). [13] The Builder’s Lien Act defines “owner” as follows: (j) “owner” means a person having an estate or interest in land at whose request, express or implied, and (

i) on whose credit, (ii) on whose behalf, (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 rightsare acquired after the commencement of the work or the furnishing of the material; [14] This definition has been interpreted by the Alberta Court of Appeal in Acera Developments Inc. v. Sterling Homes Inc. 2010ABCA 198 , 2010, 95 CLR (3d) 161 (“Acera”), at paras 23, 28 and 34: 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 whether the workdone 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" throughdemonstrating an implied request to do work. [15] Further guidance is provided by the Supreme Court of Canada in Phoenix Assurance Company of Canada v. Bird

Construction Co. , [1984] SCJ No. 39 at para 7 , where the Court stated that the overall arrangement must be examined. [ 16 ] While no contract was executed between the GEMBA Group and the Karmis Group, the evidence satisfies me that the clear intention was that the GEMBA Group would contribute the Calgary II Lands, and the Karmis Group would develop those lands at its expense. The development was intended and expected to improve the value of the lands, and the developed lands were to be sold.

The profit from such a venture was to be split evenly between the GEMBA Group and the Karmis Group. [ 17 ] I have no doubt, on the basis of the evidence and submissions before me that the development of the lands was being done at the direct request of the GEMBA Group to the Karmis Group, and impliedly from the GEMBA Group to the contractors. Further, there is no doubt that the development of the Calgary II Lands was for the direct benefit of the GEMBA Group, which was to receive 50% of the profit that was to result from the development of the Calgary II Lands.

Therefore, I find that the GEMBA Group ’ s companies Grand Park and Anthony Plaza are owners as defined in the Builder ’ s Lien Act . The reasoning provided by Thomas J in the sister action, Con- Forte Contracting Limited Partnership v. Eagle Hill Developments Ltd. , under “

Part IV Analysis ” , at paras 13-36 is adopted by me herein. Calculation of the Lien Fund [ 18 ] The Alberta Builder ’ s Lien Act provides for a “ major lien fund ” and a “ minor lien fund ” . The minor lien fund only arises with respect to work done after a Certificate of Substantial Completion has been issued on a project. That is not the case here and it is therefore not applicable. [ 19 ] The major lien fund is defined under

section 1(

h) of the BLA as follows: (h) “ major lien fund ” means (

i) 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 (

A) that is over and above the 10% referred to in section 18(1) or (1.1), and (

B) that has not been paid by the owner in good faith while there is no lien registered. [ 20 ] Section 18(1) of the BLA bears the title “ Major Lien Fund ” and its relevant provisions are as follows: 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 . . . (

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) . . ., 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) . . .

(3) Except as provided in section 13(1), when a lien is claimed by a person other than the contractor, it does not attach so as to make the major lien fund liable for a sum greater than the total of (a) 10% of the value of the work actually done or materials actually furnished by the contractor or subcontractor for whom and at whose request the work was done or the materials were supplied giving rise to the claim of lien, and (

b) any additional sum due and owing but unpaid to that contractor or subcontractor for work done or materials furnished.

(4) Except as provided in section 13(1), when, in respect of liens to which this

section applies, there is more than one lien claim arising from work done or materials furnished for and at the request of the contractor or the same subcontractor, they do not attach so as to make the major lien fund liable in their cumulative total for a sum greater than the total of (a) 10% of the value of the work actually done or materials actually furnished by the contractor or subcontractor, as the case may be, and (

b) any additional sum due and owing but unpaid to that contractor or subcontractor for work done or materials furnished. [ 21 ] The references in

section 18 to section 13(1) of the Act , are not applicable to these matters such that the exceptions related to section 13(1) do not apply. [ 22 ] As stated in David I. Bristow et al, Construction, Builders ’ Mechanics ’ Liens in Canada , 7th ed., (looseleaf consulted on 28 December 2012), (Toronto, ON: Carswell, 2005), ch. 4 at 4.9: Thus, in Alberta, not only must the owner comply with the hold-back provisions, but also it cannot safely make further payments under the contract once a lien is registered.

When a lien is registered, a hold-back and any amount payable under the contract become a “ lien fund ” and every lien has a charge on this fund. The owner ’ s liability is restricted to the total of the major and the minor lien funds or, where a minor lien fund does not arise, to the major lien fund. Thus, if it fails to comply with the Act, it will be required to pay over again.

It cannot set off the costs of completion if the contractor or a sub-contractor defaults in completing his contract. [ 23 ] The Alberta Builder ’ s Lien Act creates a right of lien against the subject property by contractors, sub-contractors, sub-sub- contractors, persons furnishing materials and persons engaged in the performance of services who are not employees of contractors and sub-contractors. [ 24 ] The Act best suits pyramidical arrangements whereby the owner contracts with the general contractor to have the general contractor build the improvement on the land.

The general contractor then contracts with sub-contractors and suppliers. Sub-contractors may in turn contract with sub-sub-contractors. All of those parties have a right to lien if they are not paid for their work product or supplied goods. [ 25 ] In defining the major lien fund in

section 1(

h) of the Act, and in assessing the amount of the lien fund in section 18(1) of the Act, the Act refers to the “ contract ” . In the normal pyramidical arrangement described above, the “ contract ” that is referenced is the contract between the owner and the general contractor; plus any other contracts that the owner has entered into directly with any other contractor or supplier. [ 26 ] The difficulty arising in this matter is that the “ owners ” did not enter into any direct contracts with the contractors. The

Karmis Group engaged Eagle Hill Developments Ltd. ( “ Eagle Hill ” ) for construction of the project. However, no written contract was entered into between the Karmis Group and Eagle Hill. Mr. Kenneth Blatz was in charge of and operating Eagle Hill, and he described the relationship in his questioning at page 6 as follows: How it would work was I would work, Eagle Hill would work as the general contractor. Every month when bills would come in I would get the bills. I would send them over to or bring them over to Nixious Investments, Suede Living. They had the same accountant.

So I would either drop them off with – to her or I would drop them off to Richard Gariepy. And then they would have a few days and they would be writing out the cheques. And then I would be giving them back to the people who did the work.

Richard Gariepy was the lawyer acting for the Karmis Group. [ 27 ] The upshot of this is that while Eagle Hill described itself as the general contractor, in fact, it was never agreed or intended that Eagle Hill would pay the bills of the contractors or sub-contractors or suppliers; rather, Eagle Hill would simply pass their invoices on to the Karmis Group for payment. [ 28 ] Eagle Hill entered into various contracts with the lien claimants.

In the case of North American Caisson Ltd. ( “ North American ” ), North American submitted quotes for their work requested, and the quotes were accepted by a letter from Eagle Hill. So far as North American understood, it had contracted with Eagle Hill, that it would perform the work and that Eagle Hill would pay the bills. [ 29 ] With respect to Keystone Excavating Ltd. ( “ Keystone ” ), a quotation was issued by Keystone to Eagle Hill. That quotation was accepted by Eagle Hill, and the work was performed, with the invoices sent by Keystone to Eagle Hill.

Again, as far as Keystone was concerned, it expected payment to be made by Eagle Hill. [ 30 ] Master Built Mechanical Contracting Ltd. ( “ Master Built Mechanical ” ) responded to an invitation to bid letter from Eagle Hill and submitted its tender to Eagle Hill. Eagle Hill advised Master Built Mechanical that Eagle Hill accepted its tender. Master Built Mechanical expected to be paid by Eagle Hill. [ 31 ] The above lien holders maintain that it was not until they questioned Mr.

Blatz of Eagle Hill in January 2012 that they learned that Eagle Hill was not a true general contractor that was being paid by the owners to build the project, and who in turn would pay the sub-contractors; but rather that Eagle Hill was administering the project as if it were a project manager, and that the invoices from the contractors and suppliers were to be paid by the Karmis Group. [ 32 ] The situation regarding Manu Chugh Architecture Ltd. ( “ Manu Chugh ” ) differs from the other lien claimants. Manu Chugh provided a fee proposal to Suede Living, a member of the Karmis Group.

The proposal, Exhibit A to the Affidavit of Manu Chugh of August 11, 2008, does not indicate written acceptance. However the affidavit evidence of Mr. Manu Chugh is that the proposal provided was accepted by Suede Living. Eagle Hill is not involved at all in that arrangement. Manu Chugh contracted directly with the Karmis Group. [ 33 ] What, then, is the “ contract ” or “ contracts ” referenced in the Builder ’ s Lien Act , when applied to this fact scenario? [ 34 ] The agreement, between the Karmis Group and Eagle Hill permitted Eagle Hill to act as if it was the general contractor.

However, that agreement did not require Eagle Hill to pay any of the bills of the contractors or sub-contractors, but rather to pass those bills on to the Karmis Group for the Karmis Group to make payment.

This arrangement was not disclosed to the lien claimants, with the result that the lien claimants understood they were contracting with Eagle Hill as the general contractor under a normative arrangement whereby the general contractor would pay the sub-contractors and suppliers and would in turn be paid by the owner. [ 35 ] In such a case, the lien claimants, other than Manu Chugh, had a contractual claim against Eagle Hill; once the arrangement between the Karmis Group and Eagle Hill was discovered, the claimants would have a contractual claim against the Karmis Group as undisclosed principal of Eagle Hill.

In other words, under these contractual arrangements, Eagle Hill acted as the agent for the Karmis Group, accepting contract proposals and directing the work to proceed, but doing so on behalf of the Karmis Group, who was ultimately responsible to pay the subject contractors.

[36] Further, the interjection of Eagle Hill into this arrangement cannot be used to defeat the Builder’s Lien Act. The Alberta Courtof Appeal in Acera Developments Inc. v. Sterling Homes Ltd.

(2010) AJ No. 1096, quoted with approval from Parkland Plumbing andHeating Ltd. v. Minaki Lodge Resort 2002 Inc., 2009 ONCA 256, at paras 67-68: 67 The absence of direct dealings between the person said to be an owner under the Act and construction suppliers is only one factor toconsider in examining the relationship between the parties. It is not determinative. Were it otherwise, a developer could easily escape itsobligations to suppliers by the simple device of arranging for an associated or related company to directly engage suppliers for theprovision of services or materials.

This would defeat the intended protection provided to lienholders under the Act. For this reason, thecourts have recognized that a “request” for work to be done may be inferred from the totality of the circumstances, viewed in light of thesubstance of the relationship between the parties: Phoenix, (SCC), [1984] 2 S.C.R. 199 at pp. 215-18; Cipriani, (SCC), [1977] 1 S.C.R. 169, at p. 173; Northern Electric, (SCC), [1977] 2 S.C.R. 762, at p. 769; Roboak, (ON CA), [1986] OJ No 261, at pp. 203-04; Muzzo, at pp. 469-71; Orr v. Robertson (1915), (ONCA), 23 D.L.R. 17 (Ont.

C.A.), at p. 18. 68 Nor was the trial judge’s reliance on Muzzo misplaced. In that case, the court was concerned with the meaning of “owner” under s.1(1)(

d) of the Mechanics' Lien Act, R.S.O. 1970, c. 267, a predecessor statute to the current Act. The court considered Phoenix, NorthernElectric and Cipriani and, consistent with these authorities, concluded that a request by a person to have work performed could beinferred from all the circumstances of the case.

Thus, in Muzzo, a vendor of subdivision land was held to be an owner for the purpose ofa lien claim where, following the sale transaction, the vendor remained the registered owner of the land and retained the rights to approvebuilding plans and to repurchase the land on certain events. [37] While, in this case, Eagle Hill is not an associated or related company, its interjection into the mix cannot be allowed to havethe effect of defeating the lien rights of the lien claimants. [38] Therefore, I find that, in these matters, the “contract” referenced in the Builder’s Lien Act, for purposes of calculating the lienfund are the contracts entered into between the lien claimants (Northern Caissons, MasterBuilt Mechanical and Keystone Excavating)and Eagle Hill.

The “contract” as it applies to Manu Chugh is the contract between Manu Chugh and Suede Living. [39] In such cases the required holdback is not only 10% of these contracts but also the full amount remaining payable under thosecontracts, pursuant to 2. 18 of the BLA. [40] In the case of the Manu Chugh lien claim, Eagle Hill is not involved. The contract was entered into directly between ManuChugh and the Karmis Group.

The lien fund in relation to Manu Chugh claim is again not limited to 10% of the Manu Chugh claim butrather the full amount unpaid, if the Manu Chugh claim is valid. [41] GEMBA group maintains that, as it was not party to any of these contracts, it cannot be held responsible to pay thosecontracts or to provide a major lien fund based on those contracts. That argument, however, is defeated by virtue of my finding that theGEMBA Group’s companies Grand Park and Anthony Plaza are owners under provisions of the BLA.

As such, they are as responsibleunder the Builder’s Lien Act as if they had entered into the contracts themselves. Validity and Value of the Lien Claims [42] The GEMBA Group concedes that the best measure of the value of services provided by North American Caisson Ltd.,Keystone Excavating Ltd., and Master Built Mechanical Contracting Ltd. is the value invoiced under the various contracts. While that isnot always the appropriate measure for determining the value of services provided, in this case it is the only evidence placed before theCourt, and its value is not contested by GEMBA group.

Accordingly, the principal value of each of those liens is declared as follows: (

a) North American Caisson Ltd. $ 719,171.84

(

b) Keystone Excavating Ltd. 138,313.23 (

d) Master Built Mechanical Contracting Ltd. 15,900.00 [ 43 ] All of these liens were filed in time and are declared to be valid to the amounts set out above. [ 44 ] The validity of the Manu Chugh Architect Ltd. lien is contested by the GEMBA Group/Anthony Plaza. Other than as described below, the evidence before the Court is the same as was the evidence was before Thomas J in Con Forte Contracting Limited Partnership v.

Eagle Hill Developments Ltd. , supra , and I agree and therefore adopt Justice Thomas ’ decision respecting the validity of the Manu Chugh lien set out at paras 37-64 of that decision. [ 45 ] The GEMBA Group argue here that the Manu Chugh lien was filed out of time. The Affidavit proving lien, signed by Mr. Manu Chugh, references invoice dates and that the lien claim was filed February 1, 2008. It does not indicate when the services were provided. Mr.

Manu Chugh was questioned on his Affidavit at page 23, line 27 to page 24, line 2 and stated: Q There was no further work done on the project on the Calgary II Lands afer December 2007; is that right? A Yes. [ 46 ] In the course of that questioning on the Affidavit, Mr. Manu Chugh gave an Undertaking No. 3 to provide dates of services provided by Manu Chugh Architect Ltd. in relation to Calgary II Lands with regard to various services that Mr. Chugh has already described, including land use amendments, changing zoning, development permits, building permits, architectural drawings and plans and marketing material.

His response was: Manu Chugh Architect Ltd. commenced to work on the project soon after being retained in November 2005. Architectural drawings were prepared throughout 2006 and 2007. Development permits were obtained in April 2006 and the building permit was obtained in the summer of 2007. The excavation began soon afterwards and Mr. Chugh responded to inquiries from contractors working on the marketing material through and after February 1, 2008. [ 47 ] Section 41(2) of the Builder ’ s Lien Act provides as follows:

(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, ... [ 48 ] As the Manu Chugh lien was filed on February 2, 2008 for the lien to have been filed on time the last services must have been completed, or the contract to provide services abandoned, no more than 45 days prior, i.e., by December 19, 2007. [ 49 ] Mr. Chugh was cross-examined on his Affidavit. The best that counsel was able to obtain from him by way of evidence is that no work was done on the project after December 2007.

Counsel has obtained no evidence that the last work done by Manu Chugh on the project preceded December 19, 2007. Nor is there any evidence before me that the contract with Manu Chugh was abandoned before December 19, 2007. The only evidence before me, therefore, establishes that the Manu Chugh lien was filed within the statutory 45 days, and is not out of time.

[ 50 ] The GEMBA Group argues that the billings for services by Manu Chugh are excessive and in excess of the contracted amounts. I do not accept that to be the case. No evidence has been placed before me that the services were not performed, or were not performed to improve the lands, or were excessively billed, or were billed additional to the contractual arrangements between Manu Chugh and the Karmis Group. Accordingly, the Manu Chugh lien is declared valid, not barred by the passage of time, and proven in the principal amount of $54,149.17. Are the Liens Barred by Section 46(2) of the Builder ’ s Lien Act [ 51 ] Section 46(2) of the Builder ’ s Lien Act provides as follows:

(2) Notwithstanding subsection (1), if no trial has been held within 2 years from the date of the registration of the certificate of lis pendens, any interested party may apply to the court to have the certificate of lis pendens vacated and the lien to which it relates discharged. [ 52 ] The GEMBA Group maintains that as these liens were filed in or around the end of 2007 or early 2008, and as CLPs all followed in the first six months or so of 2008, there has been delay by the lien claimants that merits an Order under section 46(2) of the Builder ’ s Lien Act that the certificates of lis pendens be vacated and the liens be discharged.

I am satisfied that this is not an appropriate case to make such an Order. While these claims have indeed been outstanding for a considerable period of time, the parties were waiting for a significant period to determine what the result was of the foreclosure proceedings taken by MCAP Services Corporation, to determine whether any funds would remain to satisfy the builders lien claims. Those foreclosure proceedings spanned the period of July 11, 2008 to June 18, 2010.

Thereafter, these consolidated actions, as well as the actions consolidated and heard by Justice Thomas proceeded at a pace acceptable to counsel, and without prejudice to any party, as the monies have remained in Court pending determination. Accordingly, the application of the GEMBA Group under section 46(2) of the Builder ’ s Lien Act is dismissed.

The Question of Interest [ 53 ] In Alberta, the only way that interest can form part of the lien fund under the BLA is if it is payable “ under the contract ” , meaning the contract between the owner and the contractor (Bristow, Glaholt, Reynolds, Wise, Construction Builders and Mechanics Liens in Canada , para 12.3.1(a)). However, as I have determined herein, the “ contract ” in the case of each of the lien claimants is the contract under which each of those lien claimants were operating, since the lien claimants were all to be paid by the Karmis Group.

Therefore, in each case where the contract between the lien claimant and either the Karmis Group or Eagle Hill calls for the payment of interest, that interest is to be included when calculating the lien fund. [ 54 ] North American Caisson Ltd. ’ s quotations do not address the subject of interest. North American Caisson Ltd. ’ s invoices claim interest at 1.5% per month on all overdue accounts. However, there is no evidence of any agreement having been reached to such an interest rate. The total principal amount of the NACL services is $719,171.84.

That is the value of its lien. [ 55 ] In the case of Keystone Excavating, the principal amount of the lien is $138,313.23. Keystone also claims contract interest in the amount of $145,414.23, based upon a credit application between Keystone and Eagle Hill which specifies Keystone is entitled to interest on invoices outstanding after 30 days at the rate of 24% per annum. [ 56 ] The Affidavit of Gerald Edgecombe, proving the Keystone lien, references the contract between Keystone and Eagle Hill as Exhibit A to his Affidavit.

Indeed, Exhibit A is two quotations given by Keystone to Eagle Hill, the first on January 11, 2007 and the second on January 22, 2007. Nowhere in those quotations is any reference made to interest charges on unpaid invoices. [ 57 ] The invoices issued by Keystone are attached as Exhibits B and C to the Edgecombe Affidavit. While those invoices express the term of net 30 days, there is no reference within the invoices to any agreed charges for interest on overdue accounts. [ 58 ] Counsel for Keystone argues that, in 2005, a credit application was sought by Keystone and executed by Eagle Hill

Developments Ltd. setting out interest on overdue accounts at 24% per annum. Counsel maintains that that credit application set out terms for all future contracts between Eagle Hill and Keystone such that it is carried forward to contracts relating to the Calgary II Lands. [ 59 ] There is no evidence before me to establish that the subject credit application continued or was to be applied to this work. No “ credit application ” was appended or referred in Mr. Edgecomb ’ s affidavit.

Accordingly, I do not allow the interest claim of Keystone. [ 60 ] With regard to Master Built Mechanical Contracting, Larry Cooper swore an Affidavit proving lien in the amount of $15,000.00 for services plus GST of $900.00 for a total of $15,900.00. No amount of interest is included in that claim. [ 61 ] The claim of Manu Chugh Architect Ltd. in the amount of $54,149.17 has already been accepted by me in these reasons. The contract makes no reference to interest payable on overdue accounts.

There is a note on each invoice claiming interest at a rate of 18% per annum on overdue accounts, however there is no evidence that those terms were ever agreed upon and the contract does not include any reference to any interest. Accordingly, no interest is allowed in respect of the Manu Chugh Builder ’ s Lien. [ 62 ] The total of these approved claims is the amount of the Major Lien Fund herein, that is $927,544.24. Distribution [ 63 ] The Builder ’ s Lien Act creates an interest in land by way of lien in favour of valid lien claimants (section 6(1) of the BLA ).

The lien is, of course, restricted to the land. [ 64 ] In this case, the lien fund exceeds the value of the funds in Court. Those funds in Court stand in lieu of the interest in the land. Those funds in Court are the maximum amount that is available to be distributed amongst the lienholders, subject to any encumbrances ranking above them. [ 65 ] I am given to believe there are no superior encumbrances herein. If that is correct, then the amount to be distributed amongst the lien claimants is the amount held in Court.

The amount of $440,199.65 was paid into Court upon completion of the foreclosure proceedings initiated by MCAP Service Corporation. Costs, as discussed below, are to be paid first, from the funds in court. The remainder is to be distributed to each of the lien holders in such proportion as their proven claim bears to the Major Lien Fund.

Costs [ 66 ] Having reference to the steps taken by the various lien claimants, the amounts of the liens, and the various applications taken in the actions, I award costs of the Builders Lien proceedings, inclusive of fees and disbursements, as follows: to NACL $ 10,000.00 to Manu Chugh 10,000.00 to Keystone Excavating 4,000.00 to Master Built Mechanical 1,500.00

Heard on the 26 and 27th day of September, 2012. Dated at the City of Calgary, Alberta this 17th day of January, 2013. Hall J.C.Q.B.A. Appearances: Kelsey Drozdowski Bennett Jones LLP for the Respondent/Applicant Anthony Plaza II, ULC, Calgary II Grande Park, ULC GEMBA LLC, GEMBA Fund One, GEMBA Fund Two, LLC, Duke Capital Partners LLC Philip Caron/Nicole Taylor-Smith Miller Thomson LLP for Applicant North American Caisson Ltd. David M. Bickman/Adam Brener Leon Bickman Brener for Applicant Keystone Excavating Ltd. Alexander M.

Kooiman/Philip Biggar Barristers & Solicitors for Applicant Master Built Mechanical Contracting Ltd. Peter R.S. Leveque Brownlee LLP for Applicant Manu Chugh Architect Ltd.