Factors Western Inc v Point Design Homes Ltd, 2018 ABQB 1004

Court of Queen’s Bench of Alberta Citation: Factors Western Inc v Point Design Homes Ltd, 2018 ABQB 1004 Date: 20181207 Docket: 1601 10423 Registry: Calgary Between: Factors Western Inc, formerly 1239783 Alberta Ltd Plaintiff - and - Point Design Homes Ltd Defendant _______________________________________________________ Endorsement of the J. Farrington, Master in Chambers _______________________________________________________ [ 1 ] This is an application by the plaintiff Factors Western Inc. (“Factors”) for

summary judgement against the Defendant Point Design Homes Ltd. (Point Design”). [ 2 ] Point Design engaged DCR Inc. for construction work on a project. DCR became insolvent and had difficulty paying several of its subtrades. During the construction process, DCR factored one of its receivables from Point Design to Factors in order to raise operating cash flow for the project. DCR Invoice No. I-15-0092 in the amount of $216,878.92 was factored for a payment of money by Factors to DCR.

It became clear during the course of argument that not all of the work for the factored invoice had been completed when it was rendered, but it appears that it was eventually completed although much later. Factors sought an acknowledgement from the owner

Point Design as to the quality of the invoice before closing on the factoring transaction. [ 3 ] Notwithstanding that not all of the work was completed at the time, Point Design signed the following acknowledgement: We acknowledge herewith that the account described in the above noted invoice is due and payable without dispute or offset and undertake to make payment directly to Factors Western Inc. at the address indicated above. [ 4 ] Point Design also made some minor changes to the timing of payment on the documents.

The principal of Point Design that was involved in the process is a non-practicing lawyer. [ 5 ] On its face, the matter seems simple. Factors says its written materials and letter make a contract with Point Design regarding the payment of the factored invoice, and it relied on that contract in advancing the payment for the factored invoice and Point Design breached that contract. [ 6 ] Given that I will ultimately be dismissing the

summary judgment application, I make no specific findings on that issue, but I would observe that this may not be a contract situation. There is no apparent consideration for the acknowledgement or promise to pay. While Factors argues that it was a “three-way contract”, no obvious consideration flowed at the request of Point Design. Point Design appears to have simply been trying to cooperatively facilitate completion of its project when faced with an insolvent contractor. [ 7 ] Nevertheless, the apparent lack of consideration might not be the end of the matter.

There may well be estoppel issues as a result of signing the acknowledgement, although that is not expressly pleaded, and of course there may be traditional assignment issues under which a party having notice of assignment is bound to honour the assignment. [ 8 ] Indeed, when Point Design recognized the dilemma of a possibility of being called upon to pay more than it owed to DCR because of lien fund calculation and priorities issues, it sought to pay monies into Court in what I will refer to as the “lien action”. The difficulty was that there were strings attached to the proposed payment into Court.

The proposed payment contemplated fixing the lien fund in an amount which did not include what would otherwise be the payment to Factors, as well as confirming that Factors had priority over the lien claimants. The record was not sufficient to fix the lien fund because there was no clear record of payments and timing between the owner and the general contractor, and I directed in that application that the matter proceed to trial, although I recommended a

summary trial if possible, but I could not order one. [ 9 ] In terms of whether or not payment to Factors would take priority over lien claimants the primary authority in Alberta is Van T Holdings Inc. v. KCS Equipment Ltd. 2013 ABQB 154 . There now appears to be conflicting authority in Saskatchewan in Saskatchewan Power Corporation v. Mainline Industrial Limited Partnership 2018 SKQB 222 .

Of course Van T would be binding on me if I were deciding that issue, but that is not the specific issue before me on this application. [ 10 ] Ultimately, if Point Design must pay the Factors claim, as well as not receive credit for the payment on the lien fund issue, it may result in Point Design paying more than what would be owed to the contractor DCR under the construction contract. Point Design is understandably concerned about that possible result. In my view, if it is based on contract arguments, that result would also potentially engage

section 5 of the Builders' Lien Act , RSA 2000, c B-7 which provides: 5 An agreement by any person that this Act does not apply or that the remedies provided by it are not to be available for the person’s benefit is against public policy and void. [ 11 ] Factors claims a priority over the monies that have been posted as security in the lien action based upon Van T even though it is not a lien claimant.

That is understandable, and of course Factors wishes to advance its claim in any way that it can. [ 12 ] The contract between Point Design and DCR permits for a certain finite amount of money to be available, and there are numerous claimants. Those claims can best be resolved with all of the potentially entitled parties present rather than in isolation from each other. I do not believe that a fair and just result can be achieved by piecemeal resolution of the issues. In order to grant

summary judgment here, I would have to be satisfied that the signing of the acknowledgment by Point Design was sufficient to foist liability upon Point Design, even if the result is that Point Design in the end pays more than it owes to DCR. I do not think that I can do that on this record while Factors maintains its priority claim in the lien action. Whether or not the signing of the acknowledgement may trigger effective payment of the factored invoice twice should be determined in the context of all of the parties, and all of the facts in relation to the project generally.

Piecemeal resolution without all parties present would not be fair or just. [ 13 ] The lien action is action number 1601-03928. I have previously directed a trial, or recommend a

summary trial in that action, on the lien fund issue. That will also determine Factors’ priority claim over the lien claimants. While I do not believe that it would be appropriate to consolidate the actions because not all of the parties in the lien action are participants here, Rule 3.72 allows me to do various things. Under Rule 3.72(1)(

c) I can direct that one or more claims or actions be stayed until another claim or action is determined. Under rule 3.72(1)(

b) I can direct that two or more claims or actions be tried at the same time or one after the other. Rule 1.3(2) says that a remedy may be granted by the Court whether or not it is claimed or sought in an action. I do that here. [ 14 ] The way to ensure a consistent, fair and just adjudication of the rights of the parties is to direct that this action be tried consecutively with the lien fund action, whether in a traditional trial or

summary trial as may be applicable, with this action being heard second, subject to the discretion of the hearing justice to decide how to best take evidence and whether to adopt evidence from one action in the other action. [ 15 ] Proceeding in this fashion will ensure a fair and orderly resolution which resolves all of the claims of the parties and determines whether or not Point Design is found to be liable for more than the amount owing to DCR. [ 16 ] If any of the parties encounter difficulty in moving either of the actions forward they are at liberty to apply for further directions, but my observation is that all of the parties have very capable and experienced counsel who are earnestly trying to achieve resolutions for their respective clients.

My sense is that both issues may be able to be resolved in a

summary trial if that is found to be

appropriate by the hearing justice. [ 17 ] Thank you very much to the parties for their submissions and their materials. They were helpful. The

summary judgment application is dismissed. Costs will be in the cause. Heard on the 26 th day of November, 2018. Dated at the City of Calgary, Alberta this 7 th Day of December, 2018. J. Farrington M.C.Q.B.A. Appearances: Trevor Batty Field LLP for the Plaintiff Adrianna Worman Schuettlaw for the Defendant [ 18 ]