International Brotherhood of Electrical Workers, Local 424 on behalf of the Individual Labourers listed in Schedule A Plaintiffs - v. -, 2017 ABQB 434

Court of Queen’s Bench of Alberta Citation: International Brotherhood of Electrical Workers, Local 424 v Imperial Oil Resources Ventures Limited, 2017 ABQB 434 Date: 20170711 Docket: 1301 00986 Registry: Calgary Between: International Brotherhood of Electrical Workers, Local 424 on behalf of the Individual Labourers listed in

Schedule A Plaintiffs - and - Imperial Oil Resources Ventures Limited and Horton CBI Limited and Unknown Corporation A Defendants Corrected judgment: A corrigendum was issued on August 24, 2017; the corrections have been made to the text and the corrigendum is appended to this judgment. ___________________________________________________________ Memorandum of Decision of A. R.

Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] The International Brotherhood of Electrical Workers, Local 424 (“IBEW”), registered a builder’s lien on behalf of several of its members in connection with an oil sands project. The IBEW applies on behalf of its members to have the lien declared valid. [ 2 ] Throughout this decision I will usually refer to the lien claimants as the “electricians”.

The IBEW appears only as their agent to protect their interests. [ 3 ] The lien was originally registered to claim $2,428,217.67, but the IBEW now claims only $710,374.05. I am told that after registration, the IBEW realized that much of the work for which the lien was originally claimed took place more than 45 days prior to

the registration of the lien. No one challenges the quantum of the amount now claimed. [ 4 ] The application is opposed by Horton CBI Limited, which was the general contractor. Horton retained the services of a sub- contractor which in turn hired the electricians. The sub-contractor defaulted in paying the electricians as well as many other sub-sub- contractors and suppliers. [ 5 ] The application is also opposed by another lien claimant, sub-sub-contractor Leavitt Machinery General Partnership. Leavitt might have to share in the lien fund, once that is determined, and its share might be reduced if the electricians’ lien is valid.

Section 13 gives a priority for wages, so Leavitt might have to stand behind the electricians’ liens. However, the determination of those issues is for another day. [ 6 ] The respondents argue that the electricians’ lien was not registered with the Minister of Energy and that its registration with the Registrar of Land Tiles was ineffective to protect it. Therefore, they say, it should be struck. [ 7 ] The respondents apply under rule 6.11(1)(

f) for leave to rely on an affidavit filed in related proceedings to enforce a builder’s lien registered by Pacer Foundations Corporation. The applicant did not oppose this application. [ 8 ] An application relating to a builder’s lien claim sometimes involves reliance on evidence filed in other proceedings, in light of the possibility of several different actions being brought that apply to the same lien or group of liens. The interplay between

section 48 (allowing a proceeding brought by way of originating application to provide security in place of the lien(s)) and sections 49 and 50 (requiring enforcement by statement of claim, and deeming other lienholders to be parties to a lien enforcement action although they are expressly not to be named as parties) often results in the need to look at multiple court files, which is sometimes problematic.

However, there is no utility in requiring the same affidavit to be re-filed and re-served if it is readily available to, and perhaps already served on, all parties. [ 9 ] Accordingly, I have taken into account the affidavit from the Pacer claim relied upon by the respondents. [ 10 ] I have concluded that the electricians’ lien is valid as now claimed and I make the declaration accordingly. The Statutory Framework [ 11 ] The Builders’ Lien Act , RSA 2000 c.

B-7 creates a statutory system to provide some limited protection for the benefit of those who do work on or in respect of an improvement or furnish material to be used in or in respect of an improvement. [ 12 ] The process is designed to be user-friendly, at least at the outset of the claim process, and furthermore, the Act specifically states in section 49(6) that The procedure in adjudicating on [builders’ lien] claims shall be of a

summary character, so far as is possible, having regard to the amount and nature of the liens in question and the enforcement of them at the least expense. [ 13 ] The regulations set out forms to be used by workers, contractors, subcontractors and suppliers, and the forms contain instructions on how to complete them. The instructions are written in simple terms. [ 14 ] The lien that results from doing work or providing materials does not arise upon registration, but rather upon doing the work or providing the materials.

Section 6(1) is the general provision for doing work or providing materials “on or in respect of an improvement”. [ 15 ] Section 6(2) then addresses liens on mineral recovery jobs. It provides a broad lien claim that potentially attaches interests other than those of the party who has requested the work: When work is done or materials are furnished (

a) preparatory to, (

b) in connection with, or (

c) for an abandonment operation in connection with, the recovery of a mineral, certain consequences follow. Those consequences are that the lien that results attaches to all estates and interests in the mineral concerned, other than the estate in fee simple in the mines and minerals, unless the person holding the estate in fee simple in the mines and minerals has expressly requested the work or the furnishing of material. (Emphasis added.) [ 16 ] This expanded consequence that I have emphasized is different from a lien that is not related to the recovery of a mineral.

A non-mineral lien arises when the work is done or materials furnished, “for an owner, contractor or subcontractor” and the resulting lien is only on “the estate or interest of the owner in the land in respect of which the improvement is being made.” [ 17 ] That is, for a non-mineral lien, the lien attaches to the interest of the “owner” if the work is done or materials are supplied directly for the owner, or it is done for a contractor or subcontractor of the owner.

However, when work is done or materials are supplied in connection with the recovery of a mineral, the lien attaches to all estates and interests in the mineral concerned other than the fee simple interest, unless the fee simple owner has expressly requested it. In Alberta, the fee simple owner of mineral interests is usually,

but not always, the Crown in right of Alberta. [ 18 ] The two provisions in section 6(1) and (2) are not contradictory. They simply provide a lien against potentially different interests depending on whether the work or materials are in relation to the recovery of a mineral. [ 19 ]

Section 34 specifically says that a lien may be registered in the Land Titles Office, and requires, among other things, that the statement of lien set out “a description, sufficient for registration, of the land and estate or interest in the land to be charged”. [ 20 ] Section 35(1) requires that the Registrar is to be supplied with printed forms of statements of lien and affidavits in blank, and they must be supplied to every person requesting them and desiring to register a lien.

Those are the simple forms and instructions I mentioned above. [ 21 ] Section 35(2) directs the Registrar to assist if the Registrar’s office is not the appropriate office: A Registrar [of Land Titles] shall decide whether the Registrar’s office is or is not the appropriate office for the registration of the statement of lien and shall direct the applicant accordingly. [ 22 ] Sometimes land is not “patented”, meaning that there has been no certificate of title issued by the provincial Crown.

In those circumstances, when a worker or a supplier wants to register a lien against the unpatented land, section 35(4) directs the Registrar to “make a record of the lien in a book or in any other manner that the Registrar considers advisable.” [ 23 ] Therefore, if the land on which the work is being done does not have a title issued, the lien is not invalid because of that. However, when there is no title, interests other than builders’ liens have nowhere to be registered against the surface interest.

Since Alberta only has a Torrens land titles system and not a registry system, if the government grants a surface lease on un-patented land there is no title in the Land Titles Office against which the lessee can register a caveat to give public notice of the leasehold interest that it holds. [ 24 ] Section 37(1) deals with “substantial compliance” with the completion of a statement of lien. It says A substantial compliance with

section 34 [which is the provision dealing with registration at the land titles office] is sufficient and the lien shall not be invalidated by failure to comply with any requirements of

section 34 unless, in the opinion of the court, the owner, contractor, subcontractor, mortgagee or some other person is prejudiced by the failure. [ 25 ] (It is interesting to note a possible anomaly in the Act in connection with “substantial compliance” with the registration requirements, when comparing the rules relating to construction liens and liens relating to mineral recovery. The respondents argue that the “substantial compliance” provision does not apply to liens registered at Alberta Energy because the “substantial compliance” provision in

section 37 speaks of

section 34, but says nothing about

section 36, which addresses a lien attaching to an interest in minerals. In my view, the requirements of the completion of the lien that are set out in sub-section 34(2) must apply not only to liens registered with the Registrar but also to liens registered with the Minister of Energy, because subsection (2) sets out generic requirements for completion of the lien form, not restricted to liens registered at the Land Titles Office. In light of my conclusion my view on this point is not central to the outcome.) [ 26 ] The “substantial compliance” provision in

section 37 reflects the fact of which Masters in Chambers are regularly reminded by the presence of self-represented contractors and suppliers, which is that statements of lien are often filed by unsophisticated individuals with no legal training whatsoever and very little understanding of the Builders’ Lien Act , who have attempted to comply with the registration requirements in order to protect their liens. [ 27 ] It would seem that the government of the Province of Alberta drafted the Builders’ Lien Act knowing that builders’ liens are often filed by such workers and suppliers.

So long as they know or can find out the legal description of the lands they worked on or supplied the materials to (no easy task), and they can find the Land Titles Office, they should be able to register a lien. The Registrar has to provide them with forms. If they are in the wrong place to register the lien, the Registrar is directed to refer them to the right place.

If there is no certificate of title for the land on which they have done the work, the Registrar is to accept the lien and register it anyway, and record it as best he or she can. [ 28 ] But all of this tends to fall apart when the work is done for the energy industry. [ 29 ] Liens on mineral recovery jobs are registered with the Minister of Energy, but there are some different rules and recording systems in play. [ 30 ] Nothing says that the Minister of Energy has to provide any forms, or direct the lien claimant to the right place. [ 31 ] Furthermore, the Builders’ Lien Act seems not to have kept up with the way minerals are removed from the ground.

Traditionally minerals such as natural gas and oil were removed by the drilling of wells. Coal was mined. More recently (by which I mean in recent decades), bitumen has been removed from the ground by what is essentially a mining operation. It is no small undertaking to operate a heavy oil project. It does not involve installing a temporary drilling rig and later a pump jack, but rather the construction of buildings, much heavy equipment, and a lot of land.

The Builders’ Lien Act seems not properly to have been amended to reflect the fact that a significant portion of minerals is now extracted by heavy oil projects. The nature of heavy oil extraction is not reflected in the Act . [ 32 ] For example, in 2001 the Act was amended to extend the time for the registration of a lien “with respect to improvements to an oil or gas well or to an oil or gas well site” to 90 days from the 45 days that applies otherwise. But for some reason the Act makes no reference to heavy oil projects.

It only refers to oil and gas wells . [ 33 ] More importantly for the purposes of this application, a lien might attach to (

a) a surface interest, (

b) a mineral interest that

was not reserved by the Crown, or (c) “an estate or interest in minerals held directly from the Crown in right of Alberta”. Where that latter mineral interest described in (

c) is less than a fee simple estate and the fee simple interest is not registered under the Act , then “the statement of lien shall be registered with the Minister of Energy and not with the Registrar and this Act applies to all claims of lien so registered with the Minister of Energy”: section 36(1). [ 34 ] For some reason,

section 34 (which says that a lien may be registered in the Land Titles Office) makes no reference to

section 36, and

section 36 makes no reference to

section 34. But one does not contradict the other; where the lien attaches to “an estate or interest in minerals…”

section 36 is more specific. It directs registration with the Minister of Energy, when (

a) the lien attaches to an estate or interest in minerals (

b) held directly from the Crown in right of Alberta, and (

c) the estate or interest is less than a fee simple interest, and (

d) it is not registered under the Land Titles Act . [ 35 ] If a lien attaches to a surface interest (or a mineral interest not held directly from the Crown), then

section 36 has no application. [ 36 ] But what about work done by construction tradesmen on a building that is being constructed in connection with the heavy oil project, not work done by workers who are involved in the recovery of the mineral?

It might be argued that although the tradesmen are framing a building, insulating it, cladding it, installing drywall, installing electrical lines, outlet, switches and breaker panels, installing plumbing, constructing the HVAC system, painting, installing windows, installing roofing, as on any construction site creating a building to be used for any purpose, the work that they are doing is “preparatory to” or “in connection with” the recovery of a mineral. [ 37 ] Similarly, the doing of any work for or the supply of any materials to an energy company might also be said to be “preparatory to” or “in connection with” the recovery of a mineral.

If that work is done on an office building under construction for use by an energy company that is in an urban setting - not located at the heavy oil or well site - but is to be used in connection with it (these are the words in section 6(2)), then arguably the lien should be registered with the Minister of Energy. But no one would think that. The Facts This was a Lien on a Surface Interest [ 38 ] Here, the work was done by electricians. The fact that the building they worked on happened to be a building intended to be used “in connection with” the recovery of minerals was incidental to them.

The building itself is not likely directly involved with the recovery of the mineral. [ 39 ] The electricians were not working on mineral extraction. They were working under a “Special Project Needs Agreement” between “The Coordinating Committee of Registered Employers’ Organizations” and “The Building Trades of Alberta” which was intended to cover “Capital Works undertaken as part of the Project”.

The “Project” was defined as the Kearl Oil Sands Project.” [ 40 ] The cover page of the document indicates that special needs agreement was for the Kearl Oil Sands Project “on behalf of Imperial Oil Resources Ventures Limited and Exxon Mobil Canada Properties – the “Joint Venture”. [ 41 ] The Special Needs Agreement expressly provided that it “does not apply to work which is not ‘construction’ work and does not apply to exploration or related works at or near the project .” (Emphasis added.) [ 42 ] That is, through these organizations (The Coordinating Committee representing Imperial Oil’s interests, and the Building Trades representing the IBEW and its members), Imperial Oil Resources Ventures Limited and ExxonMobil Canada Properties were expressly contracting with (and representing to) the electricians that they were not involved in mineral exploration. [ 43 ] The supply of drywall, or ceiling tiles, or flooring material or baseboards, or the digging of a foundation, or, as here, the wiring of the building, is not generally considered to be “in connection with” the recovery of a mineral.

It was “in connection with” the construction of the building. It is a section 6(1) lien. [ 44 ] With this in mind, it becomes clear that there is no need to refer, at all, to

section 36. The electricians’ lien did not of necessity attach to an estate or interest in minerals. It was a construction lien on a building. How that building might fit into a larger project is of no interest to the electricians. [ 45 ] (However, the lien may nonetheless have attached to the whole project, including the mineral interest: see Trotter and Morton v Stealth and Davidson Well Drilling , discussed below.) [ 46 ] It is important to note that Imperial Oil Resources Ventures Limited (who was named in the statement of lien as the party for whom the work was done) took no

part in this application. Imperial Oil would have had no financial interest in the outcome, because what is now at stake is security posted by Horton CBI pursuant to

section 48 of the Builders’ Lien Act , but had Imperial Oil taken part, one presumes that it would have had to admit that the electricians were not hired to explore for mineral interests. [ 47 ] Accordingly, I conclude that the lien should have been registered with the Registrar of Land Titles, as it was. Lien Against Unpatented Land [ 48 ] The lien here was against unpatented land. Registering a lien against unpatented land is hardly an everyday thing.

[ 49 ] The electricians were attempting to register a lien against the interest of Imperial Oil Resources Ventures Limited. They found out what the legal description was, and then prepared a lien, using the printed form specified in the Regulations.

The claim for lien has the instruction in the margin, “Specify owner of estate or interest upon which lien is claimed and describe his/her estate or interest”. [ 50 ] As completed using the pre-printed form, and striking out some words and adding others, their statement of lien said that the electricians (who were listed on an attachment) claims [sic] a Lien under the Builders’ Lien Act in the xxxxxxxxxx OR (specify if some other type of interest or estate applies) non- patent estate of Name Imperial Oil Resources Ventures Limited .... [ 51 ] The part that was covered with the x’s were the words “fee simple interest”.

The electricians were not trying to claim against the fee simple interest. Since the land was unpatented, it was clear that the fee simple interest remained with the Crown. [ 52 ] It is important to note that Imperial Oil’s land lease was not registered with the Registrar of Land Titles. According to the electricians, it should have been registered with the Registrar if it could have been.

It was a surface lease. [ 53 ] As they have now been able to discover, the Alberta energy regulator issued a “mineral surface lease” to Imperial Oil Resources Ventures Limited to provide Imperial with the legal right to occupy and use the lands for the purpose of an oil sands mine including plant site and related infrastructure pursuant to the Public Lands Act . [ 54 ] Although the surface lease is called a “ mineral surface lease” it does not provide the right to use, drill for, work, or recover minerals.

Registration at the Minister of Energy [ 55 ] The registration system used for mineral projects on unpatented land underscores why I say that the Builders’ Lien Act is not well structured for work done in the energy industry. The Minister of Energy registers interests that perhaps would better be registered at the Land Titles Office – but there is no title against which to register them at the Land Titles Office. [ 56 ] (The consequence of this system of registration was discussed by Lovecchio, J, in Smoky River Coal , which I will discuss below.

Since the respondents argue that Smoky River Coal was wrongly decided on the point in issue (the validity of a surface improvement lien on an energy recovery project registered at the Land Titles Office) I will set out my own analysis prior to discussing it under its own heading. [ 57 ] Because of this registry practice by the Minister of Energy, the respondents argue that everything related to this oil sands project was to be registered with the Minister of Energy, including builders’ liens. The applicant electricians take serious issue with that position. [ 58 ] Under the Public Lands Act , RSA 2000

chapter P – 40, a “disposition” is defined as meaning “any instrument executed pursuant to this Act… whereby ... any estate or interest in land of the Crown, or… any other right or privilege in respect of land of the Crown that is not an estate or interest in land is or has been granted or conveyed by the Crown to any person, but does not include a grant”. And the definition of “land” is expressly stated not to include mines and minerals. [ 59 ] The Public Lands Administration Regulation , AR 187/2011 states in

section 2 that, “subject to the act and this regulation, a disposition holder has only the estate, interest, rights and privileges expressly provided in the disposition.” [ 60 ] The Public Lands Administration Regulation defines “formal disposition” in section 1(1) (

o) as including a mineral surface lease and states in

section 21 (

n) that the holder of a formal disposition “shall not cause or allow the construction of any buildings or improvements on the land under the formal disposition other than those approved under the formal disposition, and approval, and authorization, or another formal disposition issued to the Holder relating to the same land.” [ 61 ] These provisions seem clearly to reflect surface rights and the ability to provide surface leases. Construction is only to be done as expressly authorized.

Although a surface lease may be described as a “mineral surface lease”, the disposition expressly does not include mines and minerals. [ 62 ] The Minister of Energy records some things in connection with the exploration of minerals even though they are surface interests. Alberta Energy retains a “Public Land Standing Report” with respect to the lands we are dealing with here.

The text of the affidavit to which it is attached, says, this report discloses any registered surface interest and/or activity with respect to the lands and in particular shows the surface leasehold interest registered by Imperial Oil Resources Limited and Imperial Oil Resources Ventures Limited (collectively, “Imperial”) with respect to the Lands. [ 63 ] The Public Land Standing Report purports to record - perhaps not “register” - a variety of things in a form that bears little relationship to a title at the Land Titles Office. [ 64 ] There is recorded under the heading “status/type” a “letter of authority for amendment” in favour of “Imperial Oil Resources Ventures Limited”, and under the heading “Land Activity” it is recorded as “MSL 072949”.

I am told this is short form for “mineral surface lease”, although what is recorded is not a lease at all, but rather it is a letter of authority – it appears to be a preliminary licence. [ 65 ] The Surface Materials Lease that gave Imperial Oil the right to work and remove out of the surface sand and gravel and nonmanufacturing clay in accordance with the Public Lands Act is Surface Materials Lease number SML 080005. It appears on the Public Land Standing Report as having been registered on March 5, 2009 as “Land Amendment Application”.

[ 66 ] However, this is clearly not a registration that would be equivalent to that maintained by the Registrar of Land Titles, and it expressly states that is not intended to stand in place of the Registrar’s office for all purposes. The Public Land Standing Report expressly provides at the end, under the heading “disclaimer”, the following, (which is printed all in capital letters, although I will not reproduce it in that form here): This report does not show caveats, builders’ liens , or other instruments, if any, registered at Land Titles office in respect of any lands or interests therein.

Persons are advised to also examine records of Land Titles office to ascertain whether other instruments that may concern the lands or interests therein have been registered. (Emphasis added.) [ 67 ] The respondent’s affidavit attaching records from Alberta Energy also attaches, as Exhibit 3, “a true copy of an extract from an Alberta Mineral Land Index Search Report” obtained on September 12, 2016.

The deponent says, this report shows all Crown mineral leasehold interests, and encumbrances related thereto, registered against the minerals underlying the lands, and the attached excerpt shows the mineral leasehold interest of Imperial and ExxonMobil Canada Ltd. pursuant to Alberta oil sands lease number 7400120006. [ 68 ] I can find nothing on it registered to “Imperial Oil Resources Ventures Limited”, or “Imperial Oil Resources Ventures Limited and Exxon Mobil Canada Properties”, which operate the Kearl Oil Sands Project, as described in the Special Project Needs Agreement that led to the involvement of the electricians.

What is displayed in the Search Report is the registration of an agreement number 074 740-012-0006, called “Oil Sands Lease” in the name of Imperial Oil Resources Limited (not Imperial Oil Resources Ventures Limited), showing the current participants being Imperial Oil Resources Limited and Exxonmobil Canada Ltd. [ 69 ] Imperial Oil Resources Ventures Limited and Exxon Mobil Canada Properties are not mentioned. [ 70 ] Neither of Imperial Oil Resources Limited and Exxonmobil Canada Ltd. were party to the Special Project Needs Agreement. [ 71 ] In the result, there are a number of factors worth observing: 1.

The corporations that appear to have retained the trades under the Special Project Needs Agreement apparently do not hold an oil sands lease. They apparently only have a surface lease. 2. The disclaimer that appears on the Public Land Standing Report, quoted above, is revealing. It specifically tells readers to check the Land Titles Office for builders’ liens. 3. The “Certified Copy of Nonpatent Sheet” on which the Registrar recorded the lien by the electricians records what I count to be 18 liens registered against this property by a variety of what appeared to be suppliers or subcontractors.

Of particular note is a builder’s lien registered September 5, 2012 by Leavitt Machinery General Partnership, which is one of the respondents opposing the application to have the electricians’ lien declared valid. That lien was registered, it appears, by the law firm representing Leavitt. [ 72 ] I do not criticize Leavitt’s counsel for registering Leavitt’s lien at the Land Titles Office despite the position now argued.

It is my observation that when liens appear to relate to energy jobs, builders’ liens are routinely registered against both the surface interest and against the mineral rights. [ 73 ] That is sometimes said to be out of an abundance of caution (which is the explanation counsel gave here), but in my view registration in both places reflects the fact that there are two distinct interests, and perhaps lien claims attach to both of them. [ 74 ] Work done on the surface benefits the surface interest, and the lien attaches to that interest. That is the case here for the electricians.

Other contractors or suppliers may have provided materials or work that benefited the mineral interest, and it would be quite proper to register that lien with the Minister of Energy, as is expressly provided in

section 36 of the Builders’ Lien Act . [ 75 ] Some work or materials might benefit both the surface interest and the mineral interest and the lien would clearly attach to both.

For example, a contractor who removes crops and topsoil from a farmer’s field, provides gravel and other aggregates, compacts them, and grades them it to make an oil site usable for drilling rigs, or later reverses the process to remediate the lands, might fairly be said to have provided an improvement to both the land (to the surface leasehold interest held by the energy company) as well as an improvement to the mineral interest, because the work the contractor does facilitates access to the well site.

It would seem appropriate for such a party to register both at the Land Titles Office and with the Minister of Energy. [ 76 ] Here, as stated above, the work was done in connection with the construction of a building. That improved the surface interests held by Imperial Oil Resources Ventures Limited and, perhaps, Exxon Mobil Canada Properties. [ 77 ] That “owner” (apparently being a joint venture) would not have been able to register the surface lease at the Land Titles Office, because the Crown has not issued a patent for the land.

However, that does not mean there is not a surface lease interest that was benefited by the work of the electricians. [ 78 ] It also does not mean that the lien could not properly be registered at the Land Titles Office: section 35(4) expressly says that it could be.

Description of the Interest Claimed [ 79 ] The next issue is whether the lien was registered properly because it did not expressly say that it was Imperial Oil’s “leasehold interest” that the electricians were trying to attach. [ 80 ] There is no question that it was the Imperial Oil Resources Ventures Limited interest that the electricians were trying to

attach. Their lien specifically says that (there is no reference to Exxon Mobil). [81] There is also no question that the electricians were not attempting to lien the fee simple interest of anyone.

Those words werestruck out from the pre-printed form. [82] There is also no question that the surface lease held by Imperial Oil was not registered, so there was nothing registered at theLand Titles Office that the electricians could find to refer to in order to describe it in their lien. [83] Nonetheless, the respondents say that the lien was not properly registered because it did not fully describe an interest in a lease– one that was not publicly available for review at the Land Titles Office, because the title to the lands was not yet issued. [84] The respondents rely on cases that addressed liens filed against the wrong lands and liens that specifically claimed against aninterest different from the relevant “owner’s” interest than that which the owner actually held.

In my view, these cases are clearlydistinguishable. [85] Where the lien has only been registered against the wrong lands, it ceases to exist: Electric Furnace Products Co v QualityRentals, [1991] A.J. No. 429 (C.A.). [86] The respondents also refer to Canadian Helicopters Ltd v Udo Stephen Building Materials Ltd, 2003 ABQB 322, 2003CarswellAlta 500 where Master Funduk dealt with a lien that had been claimed against the Crown’s fee simple interest, not the leaseholdinterest of the party for whom the work was done.

At paragraphs 18 and 19, the Court said: In law there is a substantial difference between a fee simple interest in land and a lessee’s leasehold interest in land. That substantialdifference is not done away with, for builders lien claimants, by the Act. Claiming a lien against a fee simple interest is not sufficient toencompass a lien claim against a leasehold interest anymore than the reverse is legally feasible. Claiming a lien against a leaseholdinterest is not a claim against the fee simple interest.

The fact that in law a leasehold interest is less than a fee simple interest isirrelevant for builders lien purposes. A right to lien the Applicants leasehold interest ceased to exist a long time ago.

Section 37 cannot be issued to resurrect a lien which hasceased to exist. [87] In my view this is simply an extension of the statement in Electric Furnace Products. The “wrong land” can either be thewrong legal description completely, or a clear claim against the wrong interest in the land. The lien claimant had claimed against theCrown’s fee simple interest. Both the wrong owner and the wrong interest had been identified in the statement of lien. [88] These two cases were referred to by Master Breitkreuz in a case that did not involve the “wrong interest” issue.

The factsbefore him involved a purported back-dating of an assignment of lien rights. In his reasons, he mentioned Electric Furnace Productsand Canadian Helicopters and said, at para. 15: Both of these decisions clearly show that the requirements of s. 34 of the Act are onerous and not to be taken lightly.

Failure to properlydescribe the interest to be liened or properly describe lands are substantive errors which are not curable by s. 37. [89] In my reading, Master Breitkruez was not intending to state that either of the preceding cases stood for more than the casessaid themselves. [90] The Respondents refer to Ed Miller Sales & Rentals Ltd v R in Right of Alberta, (AB KB), 1982CarswellAlta 164, 22 Alta.L.R. (2d) 9 which dealt with a lien claimed against a heavy oil recovery site. A company called Woodwardhad registered a lien in respect of an earthmoving subcontract.

However, the Woodward lien purported to cover only the estate orinterest of the Crown, and made no reference to Syncrude, against whom a lien was actually sought to be enforced. [91] At para. 87 to 89, after discussing other issues, the Court returned to the Woodward lien and said this:

Section 26 of the Builders’ Lien Act provides that liens which attach to an estate or interest in minerals held directly from the Crown inthe right of Alberta shall be registered with the Minister of Energy and Natural Resources and that the Builders’ Lien Act applies mutatismutandis to all claims so registered. The requirement of registration within 35 days of the delivery of the services or materials applies to liens of this nature to the same extentas others.

Woodward’s lien was never registered with the Minister of Energy and Natural Resources and, accordingly, I find that it is nota valid claim under the Builders’ Lien Act. This claim has the additional difficulty arising from the fact that the lien filed purports to attach the interest or estate in land of HerMajesty the Queen in right of the province of Alberta and not Syncrude, agent of the consortium. As has been noted, the Builders’ LienAct does not bind Her Majesty. [92] There are a few important points to consider: (

a) the decision was made under the pre-1985 substantial revision of the Builders’ Lien Act that is the direct predecessor to the Act nowin force, (

b) the Court worked on the basis that the Woodward lien was a lien that only attached the mineral interest and not against the surfaceleasehold interest, whereas here I have found the electricians’ lien to attach the surface interest, and (

c) the lien was struck because it had claimed the wrong interest from the wrong party, as in Canadian Helicopters. [93] I note that at paragraph 53, the Court said (in the context of a discussion about a different issue) that, “The plaintiffs in this

case have established their lien rights and the legislation should be liberally interpreted to achieve its objectives.” (The issue underdiscussion at that point was whether the lien attached only to a small piece of land where work was actually done or to the larger tract ofland covered by the Syncrude lease. The Court found that it applied to the larger tract.) [94] The respondents refer to Pacer Corporation v Imperial Oil Resources Limited, an unreported oral decision of MasterHanebury in Action No. 1301-12187.

This application involved the same project as the one we are dealing with. [95] A transcript of the decision was provided. An application to strike a lien had been brought in morning chambers. She hadreserved and given oral reasons. The statement of lien clearly stated that the lien was against “the fee simple interest of Imperial OilResources Limited”. She noted that any interest Imperial had was either in a leasehold interest or an interest in the mineral rights.

Following Electric Furnace Products and Canadian Helicopters she determined that the lien was registered against the wrong estate inlands and the error cannot be cured by

section 37. She did not consider whether the Pacer lien ought to have been registered at theMinister of Energy. [96] The respondents also refer to Crown Lumber Co v Stanolind Oil & Gas Co, 1959 CarswellAlta 86, but this Supreme Court ofCanada decision dealt with a previous statute that specifically said the general lien given only attached to the mineral and not the surfaceinterest, which has been significantly changed in the current Builders’ Lien Act.

It has no application here. [97] A recent decision dealing with the inverse circumstance – the right land and the right interest is named, but the wrong owner –is supportive of my conclusion. In Norson Construction Ltd v Clear Skies Heating & Air Conditioning Ltd, Master Prowse did notinvalidate a lien where the claimant had named the wrong owner. He cited the Alberta Court of Appeal in Canbar West Projects Ltd vSure Shot Sandblasting & Painting Ltd, 2011 ABCA 107 where the Court said: [C]ourts are required to adopt a strict

interpretation in determining whether a lien claimant is entitled to a lien, and a liberal

interpretationwith respect to those to whom the statute applies …. Builders’ liens are business oriented statutes with practical, as opposed toformulistic, goals; their overall intent is to ensure that “the land that receives the benefit shall bear the burden”…. [98] He held that the error in listing someone else as the owner in the form of lien did not cause it to fall under the ‘strictinterpretation doctrine’.” He noted that, “The lien already existed. It was not created when the lien form was filed at Land Titles.” [99] The approach is the same here. No one argues that the electricians did not have a lien.

The arguments focus on whether thelien was lost because it was firstly, registered only at the Land Titles Office, and secondly, registered without specifically saying itattached the leasehold interest of Imperial Oil. Prior Decision on Registration of Liens in the Energy Industry: Smoky River Coal [100] In Smoky River Coal Ltd, 1999 ABQB 492, 1999 CarswellAlta 598, Lovecchio, J. expressly found that on a mineral extractionsite it is possible to have a lien that attaches both to the surface interest and the mineral interest.

Crown Lumber was distinguishedbecause the legislation had been changed, as I have mentioned above: para. 15. [101] The Court discussed what is now section 6(2) at para. 16, quoting Wyo-Ben Inc v Wilson Mud Canada Ltd, 1985 ABCA 310, 41 Alta L.R. (2d) 289 (Alta.

C.A. 1985), and concluded that the subsection means that a lien can exist on only the mineral titlebut that does not preclude it from also attaching to the surface interests. [102] At para. 20, the Court concluded that, “even if the work that they did was solely related to the mineral recovery, the Lienholdersare entitled to a lien attaching to Smoky’s corresponding surface interests.” [103] The Court was dealing with issues of priority as between lien claimants and lending security instruments.

After concluding themineral interest liens are to be recorded with the Minister of Energy (para. 55) although surface interest liens on unpatented lands are tobe registered with the Registrar of Land Titles (also para. 55) and finding that no lease or encumbrances are to be registered at LandTitles, he concluded (para. 60) that “the legislation is inconsistent in that it provides for registering liens against unpatented land at LandTitles on the non-patent sheets but does not provide for registering competing mortgages.” [104] He then resolved the inconsistency at para. 64: It is the practice in Alberta to register security taken against surface leases of unpatented Crown land in the Department of Energy asthese are incidental to the mineral leases.

Since the surface leases depend upon the granting and good standing of the underlying minerallease for their very existence, it only makes sense that security interests against them should be registered in the Department of Energyalong with claims on the mineral interest itself. [105] Therefore, the registration at Alberta Energy resolves priority disputes.

Mortgages (and surface leases) cannot be registered atthe Land Titles Office if the land is unpatented, so the Alberta energy registration becomes the default system for determining priorities. [106] But surface-interest builders’ liens that are registered at Land Titles are valid. [107] The respondents argue that the Court in Smoky River was in error in finding that Crown Lumber no longer applies because ofthe changes to the legislation, and that builder’s liens that in any way arise from work done in connection with the recovery of a mineralshould only be registered with the Minister of Energy.

I am, of course, bound to follow Smoky River even if I think it is in error. [108] But I do not accept that it is in error. I think it is correct. I think the decision correctly interprets the Builders’ Lien Act, itreflects the practice in Alberta in registering liens, and it reflects the understanding of the Minister of Energy as disclosed in the“Disclaimer” that I quoted above. [109] The respondents refer to Clarkson Co v Ace Lumber Ltd, (SCC), [1963] S.C.R. 110, 1963 CarswellOnt 28 for

the broad proposition that since builders’ liens are creatures of statute imposed on the common law the statute should be “strictly construed as to persons entitled to its benefits and as to the procedure necessary to perfect the lien”. The case quotes from a decision of the Supreme Court of Oregon in Timber Structures v CWS Grinding and Machine Works , 229 Pacific Reporter (2 nd Series) 623 at p. 629 to this effect. The case dealt with materials supplied but not delivered to the site. Under the Ontario Mechanics’ Lien Act in place at the time there was no lien arising from those facts.

There was no discussion of the “substantial compliance” section, because the case did not deal with an attempt at registering a proper lien that had technical issues. [ 110 ] The passage quoted above from Canbar West expresses a similar view, but it adds a reference to “a liberal

interpretation with respect to those to whom the statute applies”, consistent with the “substantial compliance” provision in

section 37. The Act is “strictly construed” when the “substantial compliance” provision is given life. [ 111 ] After argument, I became aware of Master Prowse’s decision in Trotter and Morton Building Technologies Inc v Stealth Acoustical & Emission Control Inc (Stealth Energy Services) , 2017 ABQB 262 which cites Grey Owl Engineering Ltd v Propal Systems Ltd , 2015 CarswellSask 612, 2015 SKCA 108 , 392 D.L.R. (4 th ) 64 and Davidson Well Drilling Ltd (Receiver of) v Bank of Montreal , 2016 CarswellAlta 1401, 2016 ABQB 416 .

Those cases would suggest that on an energy job the work done results in a lien on the entire project even when the work is limited to one small portion of it. [ 112 ] These cases might support the argument that the electricians’ lien attached to the whole project – surface and mineral interests - but their lien was registered only against the surface interest. “Substantial Compliance” [ 113 ] Returning to the submission that there was no substantial compliance and that the lien should be “invalidated”, I reject this notion.

The statement of lien was clear that it was intended to attach to the Imperial Oil interest, whatever that was. The interest was not registered, and could not have been registered, at Land Titles.

The statement of lien was clear, by the strike-out, that it was not intended to attach to the fee simple interest, and it did not claim an interest as against the Crown. [ 114 ] In my view if a lien claimant is uncertain of the precise interest to claim against because the owner’s interest is not registered at the Land Titles Office, and the claimant does the best he can by claiming a lien against the unregistered interest of the owner - whatever it is – that is a circumstance where the “substantial compliance” rule in

section 37 must apply. Imperial’s interest here was not registered at the Land Titles Office – not because it was hiding its interest, but because the lands were unpatented, so there was no title against which it could be registered and therefore located in a search. [ 115 ] This circumstance is distinctly different from claiming against the fee simple interest of the Crown when the lien claim might have claimed against the tenancy of a different party ( Canadian Helicopters ), or expressly and improperly claiming against the fee simple interest ( Pacer ). Prejudice [ 116 ] No one was prejudiced here.

Leavitt argues that it was prejudiced because it might have to share with the electricians in the lien fund, arguing that the electricians’ lien is being “restored” by the Court under

section 37. That is not what

section 37 says. It says that if someone was prejudiced then the lien may be “invalidated” by the court. This is an important distinction. [ 117 ] The lien exists when the work is done. It is preserved by registration.

Section 37 talks about circumstances where the lien might be “invalidated by failure to comply with any requirements of

section 34” and the invalidation will only be done to the extent of the prejudice. Having to share with another lien claimant whose otherwise valid lien is not invalidated because of a technical concern is not, by itself, “prejudice”. [ 118 ] The question is whether anyone was misled and did anything to their detriment in consequence, and was therefore prejudiced. Leavitt also filed a lien at the Land Titles Office, six days after the electrical workers’ lien was filed there.

There is no evidence that they would not have filed, or that they would have filed earlier, or any other step would have been taken that is different if they had noticed that the electricians’ statement of lien did not expressly say “leasehold interest” (as apparently the Leavitt Lien did, because that is recorded by the Registrar). [ 119 ] I note that of the other 16 liens recorded by the Registrar on the non-patent sheet (besides the electricians’ and Leavitt’s liens) most do not reflect a claim against the leasehold interest.

The exceptions are ones by Ellisdon Construction, Clear Stream Energy (which also purports to attach a “fee simple estate” in addition to the leasehold estate), Convergent Technologies, and Letcar Mechanical, which show a reference to the leasehold estate. Conclusion [ 120 ] Accordingly, I find that the electricians’ lien is valid as it is now asserted, in the amount of $710,374.05. [ 121 ] The parties may contact the masters’ chambers clerk to arrange to speak to costs if they cannot agree. Heard on the 16 th day of May, 2017. Dated at the City of Calgary, Alberta this 11 th day of July, 2017.

A. R. Robertson, Q.C., M.C.C.Q.B.A. Appearances: E. Wayne Benedict and Roxana Jangi McGown Cook for the Applicants (Plaintiffs) Bradley G. Nemetz, Q.C. and Michael Selnes Bennett Jones LLP for the Respondent, Horton CBI Limited Jose A. Delgado, Bishop & McKenzie LLP For the Respondent, Leavitt Machinery General Partnership _______________________________________________________ Corrigendum of the Memorandum of Decision of A. R.

Robertson, Q.C., Master in Chambers _______________________________________________________ Page 6 Paragraph [40] – removed the following: (“Imperial Oil Resources Ventures Limited” appears to have been intended to be the party here, although the words in the style of cause seem to have been inverted, as “Imperial Oil Ventures Resources Limited”.) Page 7 Paragraph [46] – change to Imperial Oil Resources Ventures Limited Page 8 Paragraph [58] – remove the word quotes and insert quotation marks Page 10 Paragraph [68] - change to Imperial Oil Resources Ventures Limited Page 11 Paragraph [80] – removed and the words “Resources Ventures” in the full name were not inverted in the lien, although Page 11 Paragraph [84] – “owner’s” interest that that changed to than that

Page 16 Paragraph [116] – “That is not was

section 37 says” changed to That is not what

section 37 says