Atek Developments Inc v Laurel Facility Inc, 2014 ABQB 740

Court of Queen ’ s Bench of Alberta Citation: Atek Developments Inc v Laurel Facility Inc, 2014 ABQB 740 Date: 20141203 Docket: 1301 04406 Registry: Calgary Between: Atek Developments Inc Plaintiff - and - Laurel Facility Inc, Laurel Facility Limited Partnership, Laurel Facility G.P. Inc, and Man-Sheild (Alta) Construction Inc Defendants _______________________________________________________ Memorandum of Decision of J.B. Hanebury , Master in Chambers _______________________________________________________ [ 1 ] This matter came before the Court in morning chambers.

I reserved my decision to further consider the case law provided by the parties. The application raises the question of whether an owner can demand it be removed from an action on a builder’s lien when security has been posted by the contractor. [ 2 ] Atek Developments Inc., a subcontractor, filed a builders lien for $1,055,111.35 for money owed to it by the contractor, Man-Shield Construction Inc. Man Shield obtained an order from the court to post a bond as security for that sum plus costs, to stand in place of the lands. The liened lands were owned by the Laurel Facility defendants.

Atek sued Man-Shield and the owners of the property seeking payment of its lien. Laurel Facility applies to strike the claim against it. [ 3 ] The Builders Lien Act , R.S.A. 2000, c. B-7, requires a lien claimant to name the owner of the property when suing to collect

on its lien. In cases such as this, the owner is often removed from the claim by way of a consent order or the contractor has a writtenagreement to act as the agent for the owner and the owner does not participate in the action. In this case no such agreement wasprovided in evidence and the order for the posting of security provided that the order did not affect the amount required to be retained bythe owner for the lien fund under the Act.

The order originally included a clause that Man-Shield could “act as agent for the owner todetermine the lien fund”, but that clause had been struck from the order and initialed by the parties. Arguments [4] Laurel Facility applies to summarily dismiss the claim against it on the basis that no claim exists. The statement of claim, itargues, seeks a remedy only against the lands.

However, the security posted now stands in place of the lands and there is no remainingability to attach the lands. [5] Atek responds that there is an obligation under the act to name the owner in its action, and an obligation on Laurel Facility toretain a lien fund for which it, as the owner, is still liable. [6] Laurel Facility replies that there are no other claimants against the lien fund, therefore there will be no need for Atek toprorate its claim, it is entitled to the entire lien fund. It has security for the maximum amount to which it would be entitled.

It says thatthere is simply no reason whatsoever for Laurel Facility to remain in the action. To leave it in is “otiose”: Driden Industries Ltd. v.Sieber and Willemcen, 1974 CarswellAlta 38, para. 9. Analysis [7] The issue raised by these arguments is whether an owner can successfully remove itself from an action when there isultimately only one lienholder and the contractor has posted security under s. 48 of the Act for the full amount of the lien. [8] The scheme under the Builders’ Lien Act was well-described by Mahoney J. in Maple Reinders Inc. v.

Eagle Sheet MetalInc., 2006 ABQB 150, para’s 29 – 41, as quoted when affirmed on appeal at 2007 ABCA 247, para. 22. I will not repeat it here. [9] Section. 48 of the Act allows the Court to set the amount to be paid in as security for the lien. However, most orders providefor the posting of security in the lien amount plus a percentage for costs. Rarely is the amount to be posted initially the lien fund, as theamount for which the owner is liable is often unascertainable at that time.

The posting of the security under s. 48(1) is available to clearthe liens and keep the “money flowing down the construction chain” as the money stands in place of the land. However, the posting ofthe full amount of the lien does not make the owner liable for that sum as the posting of security is without prejudice. Therefore, it doesnot increase the owner’s liability for the total of the major and (if applicable) the minor lien fund: Maple Reinders (A.B.Q.B.), para’s53, 55, 57, 60; Maple Reinders (ABCA), para. 31; Calgary Masonry Supplies v. Sather Allen Holdings Ltd., (ABKB), [1994] A.J.

No. 37, (A.B.Q.B.), para’s 17, 21; Dryco Building Supplies Inc. v. S.G.H. Drywall Inc., 2012 ABQB 226, (Master),para. 4. [10] Once the security is posted the lien is no longer against the land, it is against the security: Bogardus Wilson Ltd. v. KawneerCompany Canada Ltd., 1989 CarswellAlta 525, (Master), para. 19. [11] Section 48(1), which provides for the posting of security, does not stand alone from the other sections of the Act. The Act is aseamless web. Pursuant to s. 27(3) of the Act, once the lien fund is ascertainable, an owner, or the owner’s agent, can replace the s. 48security with the lien fund.

Otherwise a contractor who posted the security would be exposed to liability it otherwise would not haveunder the Act: Maple Reinders (A.B.Q.B.), para.’s 43, 55; Maple Reinders (A.B.C.A.), para’s 23 – 29, 34. [12] It is not disputed by the parties that the most that Atek can receive from the funds paid into court is the amount of the lienfund for which the owner is liable.

The issue in dispute is whether there is any remaining claim against the owner or if the action againstit should be dismissed. [13] The Act, the case law, and in this instance the order for payment in, make it clear that the posting of security does not affectthe amount required to be retained by the owner for the lien fund: s. 48(2)(c). [14] Therefore, there is a claim against the owner that can continue after the posting of security under s. 48.

This claim may haveno basis where the parties have agreed that the amount posted will be credited toward the lien fund and the contractor posting the fundsis acting as the agent of the owner. Such an arrangement for dealing with liens is often found in the contract between an owner and ageneral contractor.

While such may have been the case in this instance, there is no evidence before the court that Man-Shield is acting asthe agent of Laurel Facility nor does the order for the posting of security make such a provision. [15] This would appear to end the application of Laurel Facility to dismiss the action against it. However, a review of the statementof claim indicates that the only relief sought against Laurel Facility relates to the lands. No claim is made in relation to the lien fund.

TheAct is clear that once security has been posted no claim against the lands remains. [16] It follows that the application to dismiss the claim against the Laurel Facility defendants is granted. [17] The applicant is entitled to its costs. Heard on the 20th day of November, 2014.

Dated at the City of Calgary, Alberta this 3rd day of December, 2014. J.B. Hanebury M.C.C.Q.B.A. Appearances: Philip R. Biggar The Law Firm of W. Donald Goodfellow, Q.C. for the Plaintiff Kevin S. Burron Burnet, Duckworth & Palmer LLP for the Defendants