E Construction Ltd v Sprague-Rosser Contracting Co Ltd, 2017 ABQB 99

Court of Queen’s Bench of Alberta Citation: E Construction Ltd v Sprague-Rosser Contracting Co Ltd, 2017 ABQB 99 Date: 20170213 Docket: 1403 13215 Registry: Edmonton Between: E Construction Ltd Plaintiff (Respondent) - and - Sprague-Rosser Contracting Co Ltd and Regional Municipality of Wood Buffalo Defendants (Applicants) _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.M. Ross _______________________________________________________ The Application [ 1 ] The Applicant is the court-appointed Receiver of Sprague-Rosser Contracting Co. Ltd. [SR].

Prior to the appointment of the Receiver on July 31, 2014, SR operated a construction company. At the time of the receivership, SR and the Regional Municipality of Wood Buffalo [RMWB] were parties to a construction contract known as the Saline Creek Drive and Bridge Phase 1 Contract [Prime Contract]. The Respondent E Construction Ltd. [ECL] subcontracted with SR to perform work on a portion of the Prime Contract [Subcontract].

ECL later filed a lien under the Builder’s Lien Act , RSA 2000, c B-7 [ BLA ] against lands owned by the RMWB [RMWB Lands] in respect of work performed [ECL Lien]. [ 2 ] The Receiver settled SR’s claims against the RMWB, including claims arising under the Prime Contract.

The settlement was approved by the Court in a Consent Order in the within action dated May 5, 2016 [Settlement Order]. [ 3 ] The Settlement Order provided for the transfer of funds in the amount of $4,432,455 [ECL Lien Funds] to be held by the Receiver’s counsel “subject to the builders lien claims of [ECL] and shall replace and stand as security in place of the [RMWB Lands]

pending determination as to the validity and enforceability of the [ECL Lien].” [ 4 ] The Settlement Order provided for the discharge of the ECL Lien and the Certificate of Lis Pendens registered by ECL [ECL CLP] from the RMWB Lands. It provided that the RMWB had no further interest in the ECL Lien or the ECL Lien Funds.

ECL’s claim against the RMWB was dismissed and the RMWB was removed as a defendant in the within action. [ 5 ] The Settlement Order also provided that there was no “admission as to the validity or enforceability of the [ECL Lien] and any interested Person shall remain at liberty to contest the validity, enforceability, quantum or other aspect of the [ECL Lien].” The Receiver and any other interested person could apply to the Court to determine entitlement to the ECL Lien Funds. [ 6 ] A further Order, dated June 28, 2016 [Procedural Order], defined issues to be determined regarding the ECL Lien, and provided the procedure to be followed in this application.

Pursuant to the Procedural Order, the Receiver is the applicant and ECL the respondent. The Royal Bank of Canada [RBC] is entitled to participate as an interested person. [ 7 ] At the hearing of the application, the parties advised that a number of issues had been resolved between them. The sole issue advanced by the Receiver and the RBC regarding the validity of the ECL Lien is whether the work performed and materials furnished by ECL were in respect to a “public highway” within the meaning of section 7(1) of the BLA . ECL contends that s 7(1) does not apply in the circumstances of this case.

ECL further contends that work that it performed that was not directly on or under the public highway, but on lands adjacent to it, is not subject to s 7(1). The Contracts and the Work Performed [ 8 ] SR and the RMWB entered into the Prime Contract on May 9, 2012, for the construction of roadways and a bridge [together “Saline Creek Drive”], and a stormwater pond, at a total contract value of $39,042,810.

The Subcontract, effective the same day, provided that ECL would complete parts of the Prime Contract, as are “necessary to construct, install and complete asphalt and concrete pavement work, granular base course work, flat work, curb and gutter work, utilities and associated works,” at a total value of $17,512,681.

The Subcontract had four parts: “A” (Roads: Prairie Loop Boulevard to Park Street), “B”(Roads: Park Street to South Project Limits), “C”(Bridges), and “E”(Stormwater Ponds at Landfill Site). [ 9 ] The Prime Contract required that SR obtain a Labour and Material Bond in an amount equal to 50% of the total Contract amount. In compliance with this provision, SR obtained a Labour and Material Bond from Western Surety Company. [ 10 ] On March 21, 2014, RMWB terminated the Prime Contract with SR. The Subcontract was not completed at this time.

Of the ECL work that had been completed, 99% related to construction of Saline Creek Drive, and 1% related to the construction of the stormwater pond. [ 11 ] On the same day, the ECL Lien was registered on certificates of title to the RMWB Lands. ECL claims that it is owed $3,837,623.47, plus GST and applicable costs. [ 12 ] There is no dispute that Saline Creek Drive is situated on the RMWB Lands. ECL did not register a builders’ lien on the title to separate lands on which the stormwater pond was constructed.

There is therefore no lien claim in respect of the amount owing for that work ($14,182). [ 13 ] Subsequently, ECL contracted directly with the RMWB to complete Part “A” and Part “C” of the Prime Contract. [ 14 ] In October 2014, portions of Saline Creek Drive (Parts “A” and “C”) were opened for public use as a roadway accessible by members of the general public. In October 2015, Part “B” was opened for public use. [ 15 ] The Division Manager of ECL, Jack Farrar, in an affidavit sworn on July 10, 2014, deposed that he was aware that Saline Creek Drive was intended to be a municipal road.

In a supplementary affidavit sworn on September 2, 2016, he confirmed that it is his understanding that Saline Creek Drive “is a Regional Municipality of Wood Buffalo municipal arterial roadway.” [ 16 ] In July 2014, Mr. Farrar also deposed that survey work on Saline Creek Drive was not complete, and no road plan of survey was registered at Land Titles. The certificates of title for the RMWB Lands did not except out road plans on the titles in respect of Saline Creek Drive. [ 17 ] Mr. Farrar was questioned on his affidavits on September 21, 2016.

The following excerpt is taken from the transcript: Q: I want to take you now to paragraph 4 of the same Affidavit. A: Yes. Q: At that paragraph, you describe the scope of the work performed by E Construction as follows: E Construction was constructing a new four-lane divided road with a median for the proposed Saline Creek Drive road. And further E Construction was upgrading in constructing underground utilities being water lines and storm sewer and related work to service the surrounding area from Saline Creek Drive road.

In addition, E Construction was constructing a new access area to service a road to a Municipal boat launch. And E Construction provided a gravel base for a future asphalt trail for pedestrians and cyclists So the nature of Saline Creek Drive and Bridge 1 project was for a public highway? A: It was for construction of a new road, yes.

Q: And it wasn’t a private road or a private driveway? A: No. Q: [...] So the Saline Creek Drive road was always intended to be a public roadway on completion? A: Intended. Q: And between the July 2014 Affidavit and the Fort McMurray fires in 2016, the roadway was completed, and it was used by the public as a public highway? A: It was used by the public following October – part of it was used following October of ’14 and part of it was used by the public following October ’15. Q: But the roadway was not for personal use or individual business or user ownership? A: No.

Q: So you would confirm with me that the Saline Creek Drive road is a Municipal road? A: It is now. Q: And that road belongs to the Regional Municipality of Wood Buffalo? A: Yes. Q: And the road was intended to be used by members of the public at large? A: Yes. [ 18 ] In sum, it is undisputed that Saline Creek Drive was intended to be used as a public roadway on completion, and that this intention was known to the parties. It was not complete or in use as a public roadway at the time the ECL Lien was filed, but it has since been opened to the public for use as a roadway.

No road plan is registered nor excepted out of the title to the RMWB Lands in respect of Saline Creek Drive. Statutory Provisions [ 19 ] Section 7(1) of the BLA provides that, “No lien exists with respect to a public highway or for any work or improvement caused to be done on it by a municipal corporation.” [ 20 ] There is no definition in the BLA of a “public highway.” [ 21 ] The Municipal Government Act , RSA 2000, c M-26 [ MGA ] and the Land Titles Act , RSA 2000, c L-4 [ LTA ] speak to public roads and the registration of road plans. [ 22 ] The MGA , s 1(1)(

z) provides: (z) “road” means land (

i) shown as a road on a plan of survey that has been filed or registered in a land titles office, or (ii) used as a public road, and includes a bridge forming part of a public road and any structure incidental to a public road; [ 23 ] The LTA , ss 82 and 84 read: 82(1) When (

a) a notification or a plan of survey that is prepared in respect of a public work under the Public Works Act or the Municipal Government Act … is submitted for registration , the Registrar shall act under subsection (2). [ Emphasis added ]. (2 ) When subsection (1) applies, the Registrar shall (

a) register the notification, plan or certificate that is submitted for registration, (

b) make the necessary endorsements on or cancellations of the appropriate certificates of title, and (

c) issue, when appropriate, free of all encumbrances, a new certificate of title for the area taken in accordance with the notification, plan or certificate. (3 ) Notwithstanding subsection (2)(c), where

(

a) the area taken consists of a public highway, road, street or lane, and (

b) a plan of survey referred to in subsection (1)(

a) has been submitted for registration in respect of the area taken, a certificate of title shall not be issued with respect to that area. ... 84(1) A plan of survey subdividing land may be registered.

(2) A plan of subdivision that is submitted for registration shall ... (

c) show all public roadways and other areas dedicated or set apart for public purposes and indicate the courses and width of each ofthem. Position of the Receiver and the RBC [24] At common law, a lien could not be registered against a public street or public bridge: Alspan Wrecking Limited v DineenConstruction Limited, (SCC), [1972] SCR 829 at 835, 26 DLR (3d) 238 (WL) [Alspan Wrecking], approving Shieldsv City of Winnipeg, (1964) (MB KB), 49 WWR 530 (Man QB, per Dickson J, as he then was) [Shields].

Any estate orinterest of a municipality in the lands “could not be made subject to a mechanics’ lien in view of the paramount right of the public topassage over such streets.

The sale of a street under a mechanics’ lien would be contrary to the public interest”: Alspan Wrecking at para17. [25] The common law principle was recognized in Alberta in Western Canada Hardware Co Ltd v Farrelly Bros Ltd, (1922) (AB CA), 70 DLR 480 at para 38, 18 Alta LR 596 (Alta SC, AD) (QL), where the Court observed that an irrigationcanal at issue in the case was analogous to “the streets of a city where the fee simple is in the city,” and that “[n]o one would eversuggest that a mechanics’ lien could be filed in a street for work done in paving or repairing it.” [26] The Receiver and the RBC do not rely on the common law principle; however, it is their position that this principle wascodified in Alberta by The Mechanics’ Lien Act, 1930, SA 1930, c 7, and has continued in subsequent lien legislation to the present day.As the BLA does not define “public highway,” the common law definition should apply.

In Shields, Dickson J approved the definition ofa “highway” as “a way over which all members of the public are entitled to pass and repass” and noted that “an essential characteristic ofa highway [is] that every person should have a right to use it for the appropriate kind of traffic, subject only to any restrictions affectingall passengers alike”: paras 49-50. [27] Master Funduk also observed that public streets could not be liened under the BLA, in Prairie Roadbuilders Ltd v Stettler(County No 23) (1983), (AB KB), 48 AR 108 at paras 3-4, 27 Alta LR (2d) 289 (QB Master) (WL) [PrairieRoadbuilders]: The project consists of a gathering system and a sewage lagoon.

The gathering system consists of sewer pipes under the streets of thehamlet, to which are connected the sewer drain pipes of the residences. The main pipes under the streets eventually channel down to atrunk sanitary line which runs outside the hamlet, along a road allowance for a public highway, then under the highway to a lift stationon the lagoon site. The lagoon site contains storage cells for the effluent. The land on which the lagoon is situate is registered in the name of the county. All of the liens are registered against this land.

Thestreets of the hamlet are not liened and could not be: first, because of s. 5(1) [currently s 7(1)] of the Builders’ Lien Act, R.S.A. 1980, c.B-12; second, because of s. 172(1) of the Municipal Government Act, R.S.A. 1980, c. M-26, which gives title to the streets to the Crown,whose lands are not lienable. [28] The Receiver and the RBC argue that the BLA, s 7(1) prohibits liens on both intended and existing public highways. Thesection provides that “no lien exists with respect to a public highway or for any work or improvement caused to be done on it by amunicipal corporation.” An “improvement” under s 1(

d) of the BLA is “anything constructed, erected, built, placed, dug or drilled, orintended to be constructed, erected, built, placed, dug or drilled, on or in land except a thing that is neither affixed to the land norintended to be or become part of the land”(emphasis added). [29] The Receiver and the RBC argue further the Prime Contract requirement for a Labour and Material Bond reflects the parties’understanding that work would not give rise to a lien.

They refer to Greenview (Municipal District No 16) v Bank of Nova Scotia, 2013ABCA 302 at para 8, 556 AR 34, where the Court observed that the labour and material payment bond provided in that case, was “aneffort to protect sub-trades who are prohibited from filing liens against a municipality.” They note that ECL made a bond demandagainst Western Surety on the same day it registered the ECL Lien. [30] Regarding ECL’s argument that s 7(1) does not apply to incidental work on adjacent lands, the Receiver submits that allincidental structures constructed by ECL were required for the roadway to function as a public highway and form part of the publichighway.

Further, both the highway itself and the adjacent lands on which related work was done are situated on the same fee simpletitles owned by the RMWB. Thus, any incidental structures are also subject to s 7(1). Position of ECL

[31] ECL does not dispute the facts or most of the legal principles referred to above. However, ECL submits that, when the workwas performed and when the ECL Lien was filed, Saline Creek Drive was not yet a public highway. It was not open for use by thepublic. No legal plan of survey had been done or registered. The lands did not yet come within the definition of a road in either of theways contemplated in the MGA, and further did not constitute a public highway within the meaning of the BLA, s 7(1).

ECL contendsthat “dedication” of the land as a public highway, through use or registration, is required before s 7(1) applies.

Mere intention to create apublic road is not enough to exclude lien rights. [32] ECL relies on the following cases from British Columbia, in which courts found that work on improvements not yet dedicatedas a public street did not come within the common law exception to lien rights. [33] In Vannatta v Uplands Ltd (1913), (BC CA), 12 DLR 669, 1913 CarswellBC 234 (BC CA) [Vannatta], theowners and developers of a private residential subdivision constructed roads in order to improve the residential subdivision, and enteredinto an agreement with the municipality that upon completion of the roads the public would have permanent free right of way over them.The British Columbia Court of Appeal held that the roads were not public highways within the Mechanics’ Lien Act, RSBC 1911, c 154.The roads were on private property and were not dedicated as public highways until they were completed.

A contractor was entitled to alien for work done on the roads, where the work was done before the roads were opened to the public. [34] Defazio Bulldozing & Backhoe Ltd. v. W.A. Stephenson Construction (Western) Ltd (1986), (BC CA),28 DLR (4th) 291, 1986 CarswellBC 145 [Defazio] concerned work done on the construction of the Automatic Light Rapid Transitsystem [the “ALRT” system] connecting Vancouver and its suburbs. The lands were owned by British Columbia Transit, a corporationestablished under the Urban Transit Authority Act, RSBC 1979, c 421 [now British Columbia Transit Act].

It was contended that liensfiled in respect of that work were precluded as the ALRT was a highway and the Builders Lien Act, RSBC 1979, c 40 [Act] did not extendto “a highway or to any improvement done or caused to be done on it by a municipal corporation.” Highways were defined as including“all public streets, roads, ways, trails, lanes, bridges, trestles, ferry landings and approaches and any other public way.” [35] The British Columbia Court of Appeal found the liens to be valid, in three separate sets of reasons. [36] Carrothers JA held, at paras 28-29, with respect to the exclusion of highways under the Act: That provision has a practical reason for being in the Act, quite apart from the undesirability of putting city streets and other “highways”in jeopardy of being sold to satisfy an adjudged lien.

In the province of British Columbia, the title to all “highways” vests in theprovincial Crown with the exception, I believe, of the city of New Westminster which was laid out before the province existed. There isno certificate of title issued by the land title offices in respect of dedicated “highways” against which claims of lien can be filed.

Theabsence of a certificate of title precludes the filing of a claim of lien under the Act I consider it an error to expand…the meaning of “highway”…I am of the view that the scheme of the Act clearly shows legislative intentto limit “highway” to one dedicated as such for land title purposes. In the light of the operative scheme of the Act, the most practical andcertain method of determining whether the subject property is lienable under the Act as not being a highway, is to ascertain whether acertificate of indefeasible title was issued in respect thereof.

If a title can be found to the land in question, it is not for purposes of the Actpart of a “highway” within the meaning of this exemption and a claim of lien can be filed against such title. [37] Lambert JA held that the ALRT system was not a highway, as there was “nothing in the definition of ‘highway’ that wouldcompel me to apply that word to something to which it would not be applied in ordinary usage”: at para 38.

He added, at para 40, that itwas unnecessary: …to consider whether the existence of a certificate of indefeasible title to a parcel of land that might be a highway determines that it isnot a highway, and that a claim of lien may properly be filed against it… [38] Esson JA agreed with the reasons of Carrothers JA, with one “reservation” (at para 42): My reservation is with respect to the discussion as to the significance of the existence of a certificate of indefeasible title in relation to thequestion whether land is a “highway.” I consider a resolution of that question unnecessary to the decision; and prefer to express no viewwith respect to it. [39] Should I find that s 7(1) of the BLA precludes a lien for work done directly on the Saline Creek Drive, ECL submits that itsunderground work, utility and pedestrian work, and other miscellaneous work, is lienable.

There was an underground utility componentto the work under the Subcontract, including water lines and storm sewers. ECL also performed work on a multi-use trail adjacent to theroad, and miscellaneous work, including mobilization and clean up. It submits that this work – with a total amount owing of$1,308,752.54 – was not directly related to construction of the public highway.

Analysis re Application of s 7(1) of the BLA [40] The British Columbia cases relied on by ECL are distinguishable from the case before me. [41] In Vanatta, the lands were privately owned at the time that the roads were constructed and the lien was filed. While theprivate owner had agreed with the municipality to later dedicate the roads, this dedication had not yet taken place. Further, as the Courtfound, the construction of roads was for the purpose of enhancing the value of the private holding.

This is a very different situation fromthis case, where the lands were publicly held, and the construction undertaken by the municipal corporation, a public body, was for thesole purpose of creating a public road. [42] In Defazio, the lands were owned by, and the construction undertaken by, a public corporation. However, the common basisfor the decision in the three opinions was that the ALRT system did not come within the ordinary or statutory meaning of a public

highway. That is not an issue in this case; Saline Creek Drive is clearly within the ordinary meaning of a public highway. To the extentthat the existence of a certificate of title was an influential factor in Defazio, Alberta law creates a further distinction. The BLA containsno definition of public highway, and there is nothing in the common law definition of a highway or the statutory definition of a road toindicate that the existence of a certificate of title is definitive. The MGA defines a road either on the basis of land titles registration of aroad plan, or use as a public road.

The municipality may submit for registration under the LTA a road plan of survey or a subdivisionplan showing public roadways, but there is no obligation on it to do so, and such registration is not required to bring a road within theMGA definition. [43] I have concluded that s 7(1) of the BLA does apply in the circumstances of this case, where a municipal corporation hasundertaken construction on lands that it owns, for the purpose of creating a public highway. No lien arises from such work.

It does notmatter that this is initial construction of the road which is not yet in use, or that no road plan has been registered at land titles. [44] In my view this

interpretation is called for by the language of s 7(1), which precludes liens “with respect to a public highwayor for any work or improvement caused to be done on it by a municipal corporation.” An “improvement” under the BLA includes initialconstruction, and even preliminary work done in relation to intended construction: s 1(d).

I am not aware of any provision of the BLAwhich draws a distinction between initial construction and subsequent work on an improvement. [45] If I accepted ECL’s argument, unless a municipal corporation has registered a road plan, which it is not required to do, none ofthe work involved in initial construction of a public highway would be subject to s 7(1).

This would put at risk the policy underlying s7(1), and reflected in the common law rule, of protecting the “paramount right of the public to passage” on public streets: AlspanWrecking at para 17. [46] As an aside, I note that the British Columbia Court of Appeal held in Defazio that the public interest protected by the commonlaw rule comes into effect only if there is a question of sale, and not in circumstances where, as here, security has been paid into court tostand in place of the lands. That does not assist ECL, as the common law rule is not relied on here.

The exemption in s 7(1) does notdepend on the remedy that is sought: it provides that “no lien exists.” Further, the Settlement Order stipulated that the provision ofsecurity would “replace and stand as security in place of the [RMWB Lands] pending determination as to the validity and enforceabilityof the [ECL Lien],” and that there was no “admission as to the validity or enforceability of the [ECL Lien].” It is clear under the BLAand the Settlement Order that the validity and enforceability of the ECL Lien is not affected by the provision of security. [47] The Alberta Court of Appeal has held that a liberal

interpretation of the BLA is called for with regard to the scope of lienrights: Tervita Corporation v ConCreate USL (GP) Inc, 2015 ABCA 80 at para 5, 42 CLR (4th) 179, citing Clarkson Co v Ace LumberLtd, (SCC), [1963] SCR 110 at 114, (1963), 36 DLR (2d) 554. That would suggest that an exemption from the scope oflien rights should be strictly interpreted. This subsidiary interpretive approach cannot overtake the primary principle of statutoryinterpretation that “the words of

an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniouslywith the scheme of the Act, the object of the Act, and the intention of Parliament”: Wilson v Atomic Energy of Canada Ltd, 2016 SCC29 at para 102, 399 DLR (4th) 193, citing Rizzo & Rizzo Shoes Ltd (Re), (SCC), [1998] 1 SCR 27 at para 21, 221 NR241; Euro-Excellence Inc v Kraft Canada Inc, 2007 SCC 37 at para 83, [2007] 3 SCR 20. The primary principle drives myinterpretation, but in my view even under a strict

interpretation of s 7(1), no lien arises where a municipal corporation has undertakenconstruction on lands that it owns, for the purpose of creating a public highway, as occurred in this case. There is no requirement in s7(1) that the highway be already in use, or registered at land titles. [48] In coming to this conclusion, I have not relied on the Receiver’s argument regarding the impact of the contractual requirementfor a Labour and Material Bond. The existence of this alternative security does not affect ECL’s rights under the BLA.

To hold that itdoes would, in my view, conflict with s 5 of the BLA: “An agreement by any person that this Act does not apply or that the remediesprovided by it are not to be available for the person’s benefit is against public policy and void.” [49] It is clear that ECL’s work on Saline Creek Drive was done “with respect to a public highway” and was “caused to be done onit by a municipal corporation” the RMWB. The s 7(1) criteria are met, and no lien arises in respect of the work.

Analysis re Work done on Adjacent Lands [50] I move now to ECL’s alternative submission that its underground work, utility and pedestrian work, and other miscellaneouswork, was not directly related to construction of the public highway and is not affected by s 7(1). [51] I note, first, that the definition of “road” in the MGA, s 1(1)(

z) includes “a bridge forming part of a public road and anystructure incidental to a public road” (emphasis added). ECL submitted that this definition should be considered in interpreting “publichighway” in s 7(1). ECL has not suggested that its work on the Saline Creek bridge should be treated any differently than its work on thehighway itself. This position is consistent with the common law cases, which have treated public bridges as equivalent to publichighways.

In my view, the same approach is called for in relation to incidental structures. [52] The evidence is that the work done by ECL on underground utilities, water lines and storm sewers, whether under or adjacentto the highway, was necessary for Saline Creek Drive to function as a public highway. The same can be said of pedestrian walkwaysbeside the highway.

These are “structures incidental to a public road,” and properly subject to s 7(1), at least where, as here, they arelocated on lands owned by the RMWB and included in the same certificates of title as the highway itself. [53] As to miscellaneous work, such as mobilization and clean up, these services are clearly related to the process of constructionof the highway and incidental structures, and are included in the definition of “work” on the improvement: BLA s 1(p). These servicesthus come within the terms of s 7(1), which provide that such work does not give rise to a lien. Remedies Issues/Trust Claim

[ 54 ] During the hearing of this application, two issues arose regarding the scope of the remedy available on this application – whether the remedy should be restricted to a declaration regarding the validity or invalidity of the ECL Lien, or should address distribution of the ECL Lien Funds. [ 55 ] The Receiver took the position that, if the ECL Lien were declared valid or partially valid, it should still have an opportunity to review quantum.

This potential issue need not be addressed, as I have found that the ECL Lien is invalid in its entirety. [ 56 ] ECL took the position that, if the ECL Lien were declared invalid, it should still have an opportunity to pursue a trust claim in relation to the ECL Lien Funds. The Receiver submits that the ECL Lien Funds should be released to the Receiver. [ 57 ] The ECL Lien Funds were transferred to be held by the Receiver’s counsel under the terms of the Settlement Order.

The Settlement Order provided that the funds were “subject to the builders lien claims of [ECL] and shall replace and stand as security in place of the [RMWB Lands] pending determination as to the validity and enforceability of the [ECL Lien].” The Settlement Order further provided that the ECL Lien Funds “shall not be disbursed by the Receiver unless such disbursement is either (

a) agreed to by each of the Receiver and [ECL] in writing or (

b) authorized by further Order of this Honourable Court.” [ 58 ] The Settlement Order further provided (in para 38): [ECL] and the Receiver, and any other interested Person, shall be at liberty to make further application to this Honourable Court, on proper notice to any party with an interest to the [ECL Lien Funds], with respect to the [ECL Lien Funds] held in respect of the [ECL Lien] and the [ECL CLP].

For greater certainty, any interested Person shall be at liberty to make an application that the [ECL Lien Funds] are subject to a trust claim under sections 19 and 22 of the BLA in the event that the [ECL Lien] is determined to be invalid or unenforceable. [ 59 ] The Procedural Order which set out the issues to be determined on this application set out only issues to be determined in relation to the ECL Lien. It made no reference to an application relating to a trust claim under sections 19 and 22 of the BLA (or any other trust claim).

It also did not refer to distribution of the ECL Lien Funds. [ 60 ] The Receiver contends that the only trust claim contemplated by the Settlement Order is a claim under the BLA , ss 19 and 22. Such trust claims are contingent on substantial performance of a contract.

This Court issued an Order on June 28, 2016, declaring that the Prime Contract was not substantially performed at the time of its termination on March 19, 2014, effectively disposing of any claim under ss 19 and 22. [ 61 ] ECL does not take issue with this but submits that there may be an alternative trust claim flowing from the trust conditions on which the funds were held by the solicitors for the RMWB before being transferred to the Receiver’s counsel pursuant to the Settlement Order.

The Receiver argues that such a trust claim is precluded by the Settlement Order. [ 62 ] There are potentially two issues regarding ECL’s proposed application regarding a trust claim: first, the impact of the Settlement Agreement on the proposed claim; and second, whether a trust claim is maintainable on the merits. Interested parties should have an opportunity to speak to these issues before the Court rules on them. Interested parties would include potential trust beneficiaries, which ECL submits may include all unpaid sub-trades on the Prime Contract.

In my view, I should not determine either of the trust issues until other interested parties have been notified and given an opportunity to make submissions. Disposition [ 63 ] The ECL Lien is declared invalid and unenforceable. No order is given regarding distribution of the ECL Lien Funds. The parties may speak to me regarding costs if they are unable to agree. Heard on the 7 th day of October, 2016; additional submissions filed on October 19, 2016 and October 31, 2016. Dated at the City of Edmonton, Alberta this 13 th day of February, 2017. J.M. Ross J.C.Q.B.A.

Appearances: Daniel R Peskett Michael T Coombs Brownlee LLP

Edmonton for the Plaintiff/Respondent SF Collins WW MacLeod T Stathakos McCarthy Tetrault LLP Calgary for the Defendants/Applicants Howard A Gorman, QC Isabel Langlois Norton Rose Fulbright Canada LLP Calgary for the Royal Bank of Canada