Superior Steel Erectors Ltd v Edmonton (City), 2021 ABQB 410

Court of Queen’s Bench of Alberta Citation: Superior Steel Erectors Ltd v Edmonton (City), 2021 ABQB 410 Date: 20210528 Docket: 1803 05855 Registry: Edmonton Between: Superior Steel Erectors Ltd Plaintiff - and - The City of Edmonton, PCL Construction Management Inc and Northern Weld Arc Ltd Defendants _______________________________________________________ Reasons for Decision of L.A.

Smart , Master, Court of Queen's Bench of Alberta _______________________________________________________ Introduction [ 1 ] The Applicant, Superior Steel Erectors Ltd (Superior), characterizes this as an application under s 53 of the Builders Lien Act , RSA 2000 c B-7 for payment of the statutory holdback for work performed for Northern Weldarc Ltd (NWL) from funds held in Court pursuant to s 48 of the BLA . Superior entered in to a fixed price contract with NWL and also performed extra work pursuant to Extra Work Orders (“EWOs”).

Some of the EWOs were to rectify work that was deficient or otherwise the direct responsibility of NWL (NWL EWOs) and others for extra work pursuant at a direction from PCL (the Construction Manager) (Owner EWOs). [ 2 ] Unlike the customary battles over extras, no argument has been put forward that the extras weren’t authorized nor that work

performed was not done satisfactorily. The issue in this case is over the Rates Charged by Superior for Work Performed under the Owner EWOs. [ 3 ] Superior invoiced NWL during the course of the contract and while extras were being performed. Most often 10% of those invoices was retained as a holdback. At the end of the contract when Superior did not receive the holdback amounts, it liened the subject lands. NWL paid into court the face amount of the lien plus security for costs and the lien was discharged.

The parties have agreed that the correct amount of the holdback is $143,033.19 plus GST which is less than the amount paid into court initially. NWL says that due to the rates Superior charged on the Owner EWOs, it has overpaid Superior by $110,207.20 and seeks to set off that amount as against the holdback. Background [ 4 ] PCL was engaged to perform construction management services for the City of Edmonton (the Owner) for construction of the Edmonton Police Northwest Campus (the Project) by a written agreement in July 28, 2016 (the “Prime Contract”).

On November 7, 2016, NWL entered into a subcontract with PCL to provide steel and metal work on the Project (the “NWL Subcontract”). [ 5 ] Earlier on May 12, 2016 Superior received an email from NWL regarding the bid package availability on the FTP site for the Project. The bid package included access to the Prime Contract with the City of Edmonton and the proposed PCL subcontract with NWL. [ 6 ] On August 24, 2016 Superior and NWL had a Subcontractor Award Meeting.

The Notes from that meeting were attached to and incorporated into the subcontract between NWL and Superior executed on January 27, 2017 (the “Superior Subcontract”). The Superior Subcontract also indicated that it was to be performed in accordance with the requirements of and on the terms and conditions of the Prime Contract being the rather unfortunate description also ascribed therein to the NWL Subcontract with PCL and to be distinguished from the description of the contract between the City of Edmonton and PCL.

Work by Superior on the Project commenced in November, 2016 before the Superior Subcontract was executed. The Rates [ 7 ] The August 24, 2016 Superior and NWL meeting Notes at s.7(

B) provide as follows: “Subcontractor to provide a

schedule of labour, material and equipment rates to NWL’s superintendent/project manager and approval by the owner. SSEL has provided two sets of rates agreed upon between NWL and SSEL. NWL will submit the rates to PCL for approval. All labour, material, equipment, overhead and profit rates are subject to approval by the owner and terms of contract.” [ 8 ] The evidence is that on November 14, 2016 Superior sent NWL an email copied to Rob Smith of PCL setting out the labour rates for Owner EWOs. This email does not mention overtime rates or rates for some equipment that was to be used.

In an email on January 25, 2017 this email was forwarded to NWL again together with a “hard copy” of the rates quoted for both NWL EWOs and Owner EWOs which included a $30 per hour overtime rate and specified some additional equipment rates. The primary issue arises because the quoted rates for the Owner’s EWOs were higher than the rates quoted for NWL EWOs. [ 9 ] Shannon Generoux the Office Manager of NWL at paragraph 11 of her February 21, 2019 affidavit states that “Attached as Exhibit “G” is a copy of the rate sheet provided by Superior to NWL (the “Agreed Rates”).

NWL agreed to pay the Agreed Rates for all additional change orders over and above the Superior Contract Price.” No mention is made of the higher rates quoted for the Owner EWO’s. She goes on to state at paragraph 17 that the PCL EWO’s (described herein as the “Owner EWOs”) . . . “were paid by NWL to Superior notwithstanding that the PCL EWO’s charge (sic) for Superiors services at a higher rate than the Agreed Rates.” [ 10 ] Lastly, Generoux states in paragraph 19 of her affidavit that “Attached as Exhibit “M” are the Superior wage rates for NWL and PCL”.

The wage rates are the same as those set out in Exhibit “G” being the NWL EWO rates quoted by Superior and referred by Generoux as the “Agreed Rates” except that the overtime rates are reduced to $20 and $25 from the quoted $30 for the Foreman and Journeyman, respectively.

Exhibit “M” does not have any equipment rates that were set out in Exhibit “G”. [ 11 ] The General Conditions forming part of the Prime Contract between PCL and the Owner states inter alia that for Change Orders “Wage rates indicated on quotations are to be comparable to the latest union agreement, if applicable, and/or the latest (June 2016) Merit Contractors Association wage and benefit survey.” This provision is obliquely incorporated in to the (PCL) NWL Subcontract and is then incorporated in broad terms in to the Superior Subcontract as described above.

Although Superior raised the certainty of the phrase “comparable to the latest union agreement”, it was acknowledged that the rates quoted in Exhibit “G” and also those in Exhibit “M” would generally fit that description. [ 12 ] In the answers to undertakings from the questioning of Generoux on her affidavit there is an email exchange dated February 28, 2017 between Everett Lewis, General Manager of Superior and Augustino Binamu, the NWL Project Manager regarding rates.

Previous emails are said to be attached (but not included with the undertaking) that set out two sets of rates and clarifying to Binamu that the higher rates applied to the Owners EWOs with Binamu’s response being that they would be submitted for approval as required by PCL. Based on subsequent emails on December 15, 2017, it appears Binamu sent along Superior EWO charge out rates along with other information to Michael King, Senior Project Manager of PCL, saying this “answers your question on why the rates are different”.

Again, what was said to be attached to Binamu’s email is not included with the answer to the undertaking. This generated a response from King. He attaches some paragraphs ostensibly from the “Prime Contract” between PCL and the City setting out how rates for CRX’s (EWOs) are to be calculated along with the Steel Collective Agreement.

He states that they “feel the rates included by Superior and NWL in all CRX’s to date” should be revised to reflect $60.86 (Superior) and $66.95 (NWL). [ 13 ] The issue of rates arose again in an exchange of emails in March, 2018 between Benjamin Chanyi (Superior) and Generoux (provided in her answers to undertakings). Essentially, she advised that the City was asking for a rate breakdown in relation to Union

Rates as a subcontractor. Generoux stated she was “not arguing your rates, we paid them.” Chanyi provided an explanation as requested to Generoux who, in turn, advised she would use that explanation in their meeting with PCL. Set Off/Estoppel [ 14 ] NWL argues that because the improper rates were charged by Superior, they are entitled to set off the overpayment arising as against the remaining amount owing. Superior says setoff is not available as the amount now being claimed and liened in relation to the 10% portion of the lien fund only. They argue there is ample authority that this is not permitted.

However, in this case there are no subordinate contractor liens or claimants and the issue here is a contractual dispute over what is owing as between NWL and Superior. In my view set off is available in this type of circumstance. [ 15 ] During the course of the Subcontract EWOs were prepared by Superior setting out the hours worked and rates charged. As required these EWOs were approved by NWL at the jobsite on the day the work was performed. Invoices (usually with a 10% holdback) were paid throughout by NWL to Superior as well.

Superior argues that as the payments were made on its invoices and the issue of rates was never raised until after it had completed its work under the contract and NWL ought to be estopped from claiming set off. [ 16 ] As an explanation for this continuing payment NWL says that it was obliged to do so under its contract with PCL. They provide a copy of correspondence dated April 11, 2017 from PCL addressing discussions about delay that NWL attributed to the City and their advice they were preparing a claim.

The letter admonished NWL that it must continue its work notwithstanding as any claim NWL might make would have to reviewed. According to Generoux in her answers to undertakings, the letter was discussed between Gordon Mernickle (NWL’s Site Superintendent) and Lewis (Superior’s GM). This, it is said, is why NWL had to and did continue to pay Superior. The exact nature of the conversation between Mernickle and Lewis is not presented and there is nothing to say the claims NWL was raising with PCL had anything to do with Superior’s Owners EWO’s.

Nor is there anything from NWL stating Superior even considered stopping work nor that it expressed any intention of stopping work unless it was paid. It was stated by Chanyi after all the work had been completed and well after the above described exchanges had taken place that had Superior known the rates were in dispute they may not have continued the work [ 17 ] Lastly, NWL says Superior cannot assert estoppel as it can only be used as a shield not a sword. Superior is seeking payment of the remaining amount it alleges it is owed under its contract with NWL.

NWL has defended claiming a set off of payments made under the contract against that amount. Certainly, the adage presented is well known. I must confess I struggle with Equity’s apparent reluctance to assist those who have been compelled to draw their sword. Although set off no longer must be pleaded by counterclaim, it is a counterclaim in this case nonetheless, that is to say, the shield raised against the claim has mounted upon it a very large spike.

Regardless, I prefer Lord Denning’s articulation of the law of estoppel in Amalgamated Investment & Property Co (In Liquidation) v Texas Commerce International Bank Ltd, [1982] 1 Q.B. 84 (C.A.) at p 122, as follows: The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with cases. That is why I have not gone through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel.

At the same time it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away with the need for consideration and so forth. All these can now be seen to merge into one general principle shorn of limitations.

When the parties to a transaction proceed on the basis of an underlying assumption - either of fact or of law - whether due to misrepresentation or mistake makes no difference - on which they have conducted the dealings between them - neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so.

If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands. [ 18 ] This description of estoppel (although no doubt legal scholars would better understand the subtleties of the difference than I do) seems very much like the duty of honesty in the performance of a contract and the principle of good faith enunciated in Bhasin v Hrynew , 2014 SCC 71 . Regardless, neither party raised the issues here in the context of Bhasin and I will comment no further on its possible application here.

The Contract [ 19 ] NWL argues that the incorporation of the “Prime Contracts” between the City and PCL and PCL and NWL and then the incorporation of the latter contract into the NWL and Superior contract should be treated in many respects as one contract, that is, treated as a flow through contract. There is a certain amount of logic to that approach but an agreement by Superior to do its Work “all in a proper and workmanlike manner and in accordance with the requirements and on the terms and conditions of both the Prime Contract” (PCL/NWL) . . . and its Subcontract (NWL/Superior), has limitations.

It is plain that NWL agreed to limits to rates it would charge PCL for extras in its contract with PCL but Superior did not agree to those limits. NWL and Superior were free to negotiate whatever rates they chose as between them. The amount to be charged by Superior is governed by paragraph 7B contained in the meeting minutes of August 24, 2016. It states that Superior had provided the two agreed upon sets of rates between NWL and Superior to be submitted by NWL to PCL for approval. [ 20 ] There is evidence to show that the rates proposed by Superior made their way to PCL for review and approval.

There is also evidence to show that there were discussions between NWL and PCL regarding rates. The challenge is that there is no clear and direct evidence of the response from PCL setting out what rates are acceptable or even if such a response exists. Calculation of Set off by NWL [ 21 ] NWL has chosen to demonstrate the amount for set off utilizing Exhibits L through O of Generoux’s affidavit. Exhibit L is

described as a master list of all EWO’s submitted to PCL with comments from PCL regarding reasons for rejection or reduction of the claims for certain extras. Exhibit N is a more detailed analysis of NWL EWO#38. Exhibit O is described by Generoux as a comparison of the rates charged by Superior with the Agreed Rates. By Agreed Rates, ostensibly, she is referring to the rates set out in Exhibit M.

Specifically, at Paragraph 20 of her Affidavit, she refers to nine NWL EWO’s: 14, 22, 27, 38, 40, 42, 43, 51 and 53, which were rejected or reduced by PCL in amounts which reflect Superior charging at rates which were not agreed to (“overtime rate claimed but work was not done on overtime”). In fact, the words quoted was all that was said in Exhibit L about rates and there is no further statement made relative to those invoices or any other invoices listed in Exhibit L to rates being charged that were not agreed upon. [ 22 ] Exhibit N does put in to issue rates charged in EWO 38.

PCL requests, in the first seven entries of the Exhibit, an explanation as to why $30 was charged for overtime when your (NWL) labour rates show $20 and $25 for over time rates for a Foreman and Journeyman, respectively. Six of those seven entries also request time sheets to back up the overtime worked. There are many other questions asked in both Exhibit L and N but none refer to rates charged by NWL or Superior.

Going back to the master list the entry for EWO 38 states “Questions were sent to NWL but none of the questions were answered.” [ 23 ] Exhibit O sets out the PCL EWOs numbered 1 to 47, and for each EWO: (Superiors) Inv #, the hours worked or time equipment was used, the (Superior) Rate/HR, the extended amount – “EWO Cost”, NWL Rate/HR, the extended amount based on the NWL Rate/HR – “Rate Difference”. The final column is the difference between the two extended amounts i.e. EWO Costs minus the Rate Difference labelled Variance.

The Variances are then totaled for the 47 EWO’s to arrive at the set off amount. [ 24 ] The NWL Rate/HR appears to be based on the labour rates set out in Exhibit M. The fundamental difficulty with this approach is that nowhere does PCL say those are the rates they will accept for extras performed by Superior and nowhere do they expressly state they will not accept Superior’s rates, labour or equipment.

The only express objections to Superior’s charges are set out in Exhibits L and N which question overtime rates and whether work was performed on an overtime basis (PCL EWO’s 14, 22, 27, 38, 40, 42, and 43 listed in Exhibit O). Furthermore, there is no express exception taken by PCL to rates charged for equipment that would support the reductions in Exhibit O. [ 25 ] The Superior Rate/HR ascribed by NWL in Exhibit O on the “objectional” invoices show no increase in rate for overtime charged above the regular Superior rate ascribed to all of the other invoices.

There is insufficient particularity provided by PCL to ascertain the basis for this and NWL has provided no explanation. For EWO 22 in Exhibit L, the entry indicates the OT was paid, based on the benefit of the doubt. It is also of interest to note that reductions were claimed for EWO 1, 16, 23, 32, 36, 39, and 45 where in each case the entry states “accept NWL costs” and were allowed in full. In the case of EWO 3, 11, 12, 13, 17, 35, 46 and 47 they are noted as: “Already Processed and paid”. EWO 2 is not listed at all.

Discussion/Analysis [ 26 ] The Application before me is for a Declaration of the validity of the Builders’ Lien filed by Superior for its holdback. The parties have agreed to the proper amount held back and do not dispute the validity of the Lien per se. As I have noted the substance of this application is ultimately for a determination of the balance owing under the contract as between them. NWL argues it is entitled to set off for what it alleges to be an over-payment. Superior strenuously argues that no set off is permitted under the Builders’ Lien Act and authorities.

In my view, the limits on set off arising from the BLA and its

interpretation have no application here and is permitted in these factual circumstances. [ 27 ] Regardless, whether the analysis is conducted in the context of the Act or straight contract the same principles apply, that is, the determination must be made on the same standards as a

Summary Judgment application. Both parties agree this matter should proceed to resolution based on the material before me. Ultimately, I must decide if a fair and just determination can be made on the record ( Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49 ). [ 28 ] Superior has established its claim based on the rates it quoted for the work to be done. Although much is made by NWL regarding provisions in the Prime Contract(

s) governing rates and processes to be followed, ultimately the rates were to be determined by submission of the rates to the Owner/PCL for approval. There is evidence presented by NWL that Superior’s rates were submitted to PCL. This evidence also indicates that there were negotiations and discussions on these rates between NWL and PCL. Precisely, what was discussed and the outcome of those discussions is not disclosed. What is presented as evidence of the discussions with PCL are Exhibits L and N and are said to be determinative of the rate issue.

Comments regarding overtime rates and hours worked as overtime are made by PCL. Reliance upon the wording in the Prime Contracts is used as justification to reduce Superior’s rates to be in line with “Union Rates”. Apparently, one is to assume that PCL took that position and reduced payment on “Superior” invoices, accordingly.

Other than the feelings expressed by PCL’s Senior Project Manager in the email exchange with NWL’s Project Manager on December 15, 2017, there is no evidence from PCL as to what rates were disapproved nor specifically any further discussion or agreement arising from the feelings expressed. [ 29 ] On its face there appears to be evidentiary gaps in the record relating to the rates approved by PCL but it is NWL’s obligation to put its best foot forward.

The evidence presented by NWL simply falls short of establishing the reductions and the consequential set off it seeks. [ 30 ] Although it is unnecessary to decide it is apparent to me that if I am wrong on the conclusion above that an excellent case can be made by Superior that NWL is estopped from claiming set off. Superior was paid throughout without comment or objection. Reference to the letter regarding the continuous work requirement provides no support that NWL was compelled to pay Superior. Perhaps NWL felt it must pay but that was not communicated to Superior.

The first time the possibility Superior’s rates might be disputed by PCL was well after it had performed its work and then it was stated by NWL they weren’t arguing their rates, they had paid them. Disposition

[ 31 ] Based on my conclusions above, I declare the Superior Lien valid and direct payment out of the agreed sum to Superior plus interest and costs. The claim for set off is dismissed. If Counsel are unable to agree on the amounts for interest and costs they may make written submissions, not more than two pages in length, to me within 30 days of this decision. Dated at the City of Edmonton, Alberta this 28th day of May, 2021. L.A. Smart M.C.Q.B.A. Appearances: Michelle Andresen McAllister LLP for the Plaintiff Robert Farmer Bishop & McKenzie LLP for the Defendants