CANA Management Ltd v Condominium Corporation No., 2021 ABQB 470

Court of Queen’s Bench of Alberta Citation: CANA Management Ltd v Condominium Corporation No. 0513341, 2021 ABQB 470 Date: 20210617 Docket: 1501 03090 Registry: Calgary Between: CANA Management Ltd. Plaintiff - and - Condominium Corporation No. 0513341, and The Owners of Condominium Corporation No. 0513341 Defendant _______________________________________________________ Endorsement of A.R.

Robertson, Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] The defendant condominium corporation asks that the plaintiff’s builder’s lien be removed on the basis that it was filed out of time. The application has been dealt with entirely in writing. There were affidavits. Cross-examinations, and briefs were filed. Both sides agree that the application can be dealt with summarily. [ 2 ] The condominium in question is a building in Canmore, Alberta, known as “The Portal”.

The plaintiff, CANA Management Ltd., was approached by Anast Demitt, P.Eng., of ADEM Engineering who was acting as the project manager and agent of The Portal’s condominium corporation, in order to provide a construction management proposal and to assist in the resolution of building envelope issues.

[ 3 ] That is, CANA Management was not asked to construct anything. Rather, it was to assist in dealing with issues arising from errors in the original construction of the building. [ 4 ] CANA was to take directions from representatives of The Portal. ADEM Engineering was to review the work that Canada was performing. [ 5 ] CANA Management started work, submitted three invoices, but was not paid. It registered a builder’s lien. Was it registered too late? Security was provided to remove the lien from its registration, and the condominium corporation asks that the security be returned. [ 6 ] The deadline for registering a lien for services is set out in section 41(1) (

a) of the Builders’ Lien Act , RSA 2000, c. B-7 , as follows A lien for the performance of services may be registered at any time within the period commencing when the lien arises and (

a) subject to clause (b), terminating 45 days from the day that the performance of the services is completed or the contract to provide the services is abandoned ... . [ 7 ] (Paragraph (b) (or “clause (b)”) deals with improvements to an oil and gas well or an oil or gas well site and is not relevant here.) [ 8 ] Note that this

section makes no reference to when the last work was done. [ 9 ] Subsection 41(5) deals with correcting things improperly done or omitted to be done and done later. It provides as follows: Notwithstanding subsections (1) to (4), the time limited by this

section for registering a lien is not extended by reason only that something improperly done or omitted to be done in respect of work done or materials furnished is corrected or done, as the case may be, at a later date. [ 10 ] I have concluded, based on the evidence before me, that the statement of lien was registered at the Land Titles office within time. The work that CANA Management had been asked to do was never completed, and it did not “abandon” the work until approximately the time that it was filing the lien.

Background [ 11 ] There had been a number of errors in the original construction of the building by a prior contractor, and the reason that CANA Management was asked to become involved was to address problems. The project was made more difficult by two problems in particular: (

a) there were no proper “as built” drawings to work from, and (

b) the original construction contractor had not followed the plans. [ 12 ] The circumstances of this case are made a little more complicated by the fact that no final contract had been entered into before work started. This was because the scope of the work was somewhat uncertain, and as work started the scope became somewhat ever-changing. [ 13 ] The nature of the work that CANA Management was asked to perform was, in a sense, correcting “deficiencies” in the work performed by another contractor. That has contributed to some confusion in the proper analysis of the facts. Section 41(5) is often referred to as a

section that prevents the extension of the time for registering a lien merely because the contractor is correcting “deficiencies”. That is a colloquial paraphrase of the subsection, but this subsection does not actually use the word “deficiencies”. And here the work was to correct the deficiencies of another. [ 14 ] Although there was no final contract entered into (as there was supposed to be), there was a letter of June 11, 2014 from CANA Management Ltd. to The Portal condominium board that sketched out what was intended.

That letter generally described the scope of work, as it was understood by CANA at the time, as follows: At present, we understand the CANA scope of work for this project to include investigation work, and repairs to the unit balconies and the waterproofing for the underground elements. The scope of the project will be developed through consultation with the project consultants. [ 15 ] Two paragraphs later, the letter stated: The first step of the project will be to review the report provided by ADEM Engineering and BEEI. We will also review the reports and site conditions with sub trades.

This information will be used to provide a working budget for the project. [ 16 ] What is most important, for this application, is that CANA was never retained to construct a complete building (or an addition to a building, or a renovation) and turn over a finished product to the customer. The extent of the work was to be developed over time. [ 17 ] Given the circumstance, CANA had agreed to charge on the basis of a percentage of the fees charged by the various sub trades.

CANA provided full documentation and backup showing the exact hours put in and material purchased with their cost reports used to substantiate the invoices. [ 18 ] As the work began, CANA’s construction manager, Adam Doig, described work on the first patio as being “build by Braille”. He explained in cross-examination that the documentation that CANA had to start the project was not complete nor accurate to the actual construction, meaning that what they saw was not what was on the drawings. This meant that a traditional change order for every change was not a viable situation.

An in simple terms, CANA was “feeling its way” as it went.

[ 19 ] According to Mr. Doig’s evidence, “a sprinkler line came into contact with a saw blade”. CANA's workers were removing insulation because the wrong type of insulation in the floor joist cavity had been installed. In order to do this, they set their saws to a depth of cut so as not to damage the drywall ceiling below. This would be a normal and standard practice, but there was a sprinkler line in the joist cavity which should not have been there. It was an unheated external cavity and Mr.

Doig believed the placement of the sprinkler line was against the Building Code , but in any event it was against best practice. When the sprinkler line was hit, that caused damage to the floors below, and therefore CANA had to do work to remediate that damage. [ 20 ] Mr. Doig’s perspective (which he says was agreed and discussed with ADEM Engineering) was that that remediation would be part of CANA’s work and recoverable. [ 21 ] However, the witness for the condominium corporation, Mr.

Dickson, considered that remediation work to be “deficiency” work, because the damage to the sprinkler line was “damage they [CANA] caused” and therefore, in his mind, everything arising from that was simply addressing the deficiency, “for repairing work they damaged”. [ 22 ] I gather that this is one of the disputes in the lawsuit as a whole, and I do not mean to resolve that issue here. I simply point out that the only proper evidence before me demonstrates for the purposes of this application the sprinkler damage repair cannot properly be described as “deficiency” work.

That appears to have been precisely the sort of problem that the CANA would, in general terms, have expected to have done without “as built” drawings, because the original construction contractor did not properly follow the plans. Surprises would have been inevitable. Confusing Correspondence [ 23 ] Correspondence at the time work initially stopped adds to the confusion, because when CANA originally tried to “put its tools down”, Mr. Doig wrote a letter dated November 14, 2014 with a confusing enclosure.

His letter set out the history, noting that the work being undertaken and budgeted did not have a clearly defined scope and limit, and that unseen conditions would be encountered.

He specifically discussed the incident of damage to the sprinkler pipe that occurred during the course of demolition. [ 24 ] He then said some things that the condominium corporation argues meant that the work CANA was doing was “completed”. [ 25 ] He said, “General project work on units 611 and 621 were completed October 10, 2014.” (I note that he did not say that the work as a whole had been completed.) [ 26 ] He then referred to list of “concerns” and indicated that CANA will be resolving them at no cost to the project.

He discussed the fact that CANA had submitted two previous invoices, on August 31st and September 30th, 2014, that CANA had not been paid, and he then said, “Included with this letter is the third and final invoice for the project. This invoice includes the release of hold back funds for the project to date. A copy of CANA's substantial performance letter is included for your records.” Unsigned Certificate of Substantial Performance [ 27 ] That enclosed document, entitled “Certificate of Substantial Performance” was not signed.

It purported to certify that, “The work is in accordance with the plans and specifications”, and “The work or a substantial part thereof is being presently utilized for the use intended”, and “The work to be done under the contract/subcontract is capable of completion or correction at a cost of not more than $ 0.” [ 28 ] It then went on to say, “The contractor and his subcontractors shall continue to work towards total completion.” [ 29 ] A certificate of substantial performance is appropriate to issue in order to obtain release of the major lien fund.

That has no relevance to the facts here. [ 30 ] The form of this document was clearly a standard form that was completely inappropriate for the circumstance. The project had not been fully (or even substantially) completed, and this form did not purport to indicate it that it had been fully completed. [ 31 ] Moreover, to the extent that this unsigned document is relevant, it specifically said that the contractor “shall continue to work towards total completion”. That contradicted the overall message in Mr.

Doig’s letter, which was to the effect that CANA was “not interested in engaging in any additional work on this file” because it had not been paid, and that it was preparing to place a lien on the property’s title. Neither Completion nor Abandonment [ 32 ] Everyone knew that the project was not complete. Each of the three invoices set out the percentages of completion of the various steps that CANA anticipated or required.

The third invoice included a claim for the holdback, but the project was not anywhere close to 100% complete. [ 33 ] It might be argued that this November 14 letter constitutes an “abandonment” of the work, but that is not what the letter says, nor does it reflect what CANA did next. [ 34 ] Therefore, although one might argue that the letter constituted an abandonment of the work, that does not accord, at all, with the facts. CANA continued to return to the project to address the “concerns” that had been raised.

Supposed “Deficiencies” [ 35 ] One of the concerns was that there was some debris, consisting of unused lumber, left on a patio. However, there is no dispute that that lumber was not placed there by CANA. Removing that abandoned lumber would have been part of the contract work that CANA was to do, and it did it within the 45 days preceding the registration of the lien.

[36] This is noted by an email from Anast Demitt of ADEM Engineering addressed to representatives of The Portal, dated January15, 2015. He notes that CANA had been out to the site that week (presumably approximately the second week of January, 2015), and hesays, The boards laying outside were apparently from the previous contractors and not CANA.

CANA was to remove them from site. [37] The statement of lien was registered on January 28, 2015, much less than 45 days after that work was done. [38] There were other things done that might be described as the correction of work done in error, or work that had been omitted tobe done, and might lead to an argument that the lien was late if subsection 41(5) were in play, but the evidence about them is notespecially satisfactory.

Some escutcheon rings (decorative rings around sprinkler heads) and expansion rings might have been installedDecember 14, 2014, but the deponent for The Portal had no knowledge of when that was done and the bit of information provided byCANA is not definitive. A motion detector had been left hanging and was repaired within the 45 day period, and while this seems tohave been left in an unfinished state by CANA’s workers, that is not clear. [39] However, this specific work (removal of the debris), by itself, was not work to correct a “deficiency”.

The “deficiency” beingcorrected was a deficiency in a previous contractor's work, and it was one of the things that CANA was to be doing under thearrangement with The Portal. CANA simply chose not to charge for it. Mr. Doig explained that the cost of billing for it was not worthit. No Charge [40] The Portal argues that the fact that it was not billed means that this bit of work had no value. There are three responses tothis. [41] Firstly, the fact that it was not billed does not mean it had no value to The Portal.

It just was not worth the overhead involvedfor CANA to bill for it. [42] Secondly, the fact that it was not billed is not the test. The lien may be registered at any time within the period commencingwhen the lien arises, as set out in

section 41. The lien is created when a person “does or causes to be done any work on or in respect ofan improvement”, as set out in section 6(1) of the Builders’ Lien Act. That is, a contractor or subcontractor may, legally, register a lienshortly after commencing work before submitting an invoice. Although that would be foolish on a business level, early registration doesnot invalidate a lien. [43] Thirdly, subsection 41(5) was simply not in play. Regardless of the concerns about “deficiencies”, the work was simply notcomplete in October, 2014 nor had it been abandoned.

Complete means Complete [44] The Supreme Court of Canada has made it clear that a contract is “completed” only when all of the work is done: Lambton(County) v Canadian Comstock Co, (SCC), [1960] S.C.R. 86, 21 D.L.R. (2d) 689, 1959 CarswellOnt. 89. The interiminvoices here all make it clear that all of the work had clearly not been done.

As the Court said, “Completion means what it says”. [45] That’s also what Master Funduk said in Shearwall Forming (Yukon) Ltd v HMW Building Systems Ltd, (AB KB), 1991 CarswellAlta 424, 122 A.R. 318. [46] Prior to the significant changes to the Builders’ Lien Act in 1985, “completion” had been defined as follows: “‘completion ofthe contract’ means substantial performance, not necessarily total performance, of the contract”, but in 1985 the Act was re-written toinclude the concepts of “major lien fund” and “minor lien fund” and it is for those purposes that “substantial performance” relevant.

There is no longer a definition of “complete”, so the word means what it says. [47] The 45-day period runs from completion or abandonment, not simply from the last day on which work was done. Othercircumstances make this clear. It is not uncommon for work on a construction project to stop for an extended period of time on a generalcontract or a sub-contract without either completion or abandonment, such as: materials are not available due to a manufacturer’s delay;weather does not permit continuing work for a time; or there is a strike by a critical trade.

This is particularly common in the energyindustry, when work temporarily shuts down for spring break-up. [48] The intended work was not complete. Furthermore, the work had not been abandoned. CANA made it clear in Novemberthat it was going to go back to the site and address the concerns that had been raised, and Mr.

Doig's explanation of why at least some ofthe additional work was not charged for was simply because it was not worth the cost of the billing. [49] Therefore, subsection 41(5) was not in play here. [50] The fact that CANA kept going back to address the concerns, despite not having been paid, suggests that if The Portal hadpaid their invoices, or perhaps some of them, it may have agreed to continue working. “Trivial” Work [51] It would be correct to describe this bit of work (removing the debris) as “trivial”, but that is also not the test as to whether ornot work was done substantiates a lien.

Our Court of Appeal made it clear in Glenway Supply (Alta) Ltd v Knobloch Drywall, 1972AltaSCAD 67 at paragraphs 13 and 24 that the triviality of the work, when compared to the size of the contract, “makes no difference sofar as the validity of the builder’s lien is concerned, provided the materials furnished and the services performed were done in good faithto complete the contract and not colorable.” That is consistent with the Supreme Court’s statement in Lambton that it is irrelevant thatthe last work performed is trivial.

Wording on the Statement of Lien [ 52 ] The statement of lien was dated January 26, 2015. It includes the statement, “The work was completed or the materials were last furnished on December 19, 2014.” [ 53 ] Perhaps when the statement of lien was first drafted, that was the last date on which work had been done. Mr. Doig’s November 14, 2014 letter had included the advice that “CANA is preparing to place a lien on the property prior to the 45-day deadline in order to ensure collection of these funds.” It seems likely that the document was drafted in December, 2014.

However, we now know that CANA continued to do some work well after that date. Perhaps Mr. Doig was hoping that The Portal would pay the outstanding invoices. [ 54 ] CANA finally made it clear that it would not be doing any more work (i.e., that it was “abandoning” the contract) in Mr. Doig’s email of January 23, 2015 when he said that arrangements for some further work were being cancelled. He stated: Please be aware that as of now CANA will not be attending site for the portal condos for any outstanding issues until full payment is received for the outstanding invoices submitted.

CANA has done a significant amount of work on site to date and has not received any payment for any portion of the work performed. We cannot continue to work with expectation of receiving compensation as agreed. [ 55 ] In my view, that is the date when the 45 days first began to run for the registration of the lien. It was registered five days later. Conclusion [ 56 ] Accordingly, the application for an order directing that the security provided under

section 48 of the Builders’ Lien Act is dismissed. The Applicant’s brief (that is, the condominium corporations’ brief) asked for an order directing that the matter proceed to trial, but that was not the focus of the arguments. This claim has been outstanding for some time, and I expect that counsel will finalize the matter for trial promptly, but I will not make a procedural order at this time. Costs [ 57 ] Costs would normally be payable by the unsuccessful party to the successful party, which in this case means that costs would be payable by the condominium corporation to CANA Management for the application.

I set out a tentative award. [ 58 ] As the amount of the claim is less than $75,000, the costs would be awarded under Column 1 of the recently amended

schedule “C”. There is no specific entry in

Schedule “C” for a desk application as this was (without an oral hearing), but if there were an oral hearing requiring briefs the amount would be $1,350.00 for a half day, plus applicable disbursements (photocopying, delivery charges and the like as well as the costs of cross-examinations). I would use that amount, despite the fact that there was no oral hearing. [ 59 ] In addition, the appropriate costs for adjournment(

s) would be payable, if that is otherwise appropriate. [ 60 ] Although item 5 of the

Schedule “C” tariff expressly refers to oral questioning under

Part 5 (which this was not), using the analogy rule (rule 1.7(2)) I would direct costs using the amounts indicated under

Part 5, plus the cost of the transcripts. That would be $675, assuming that the cross examinations took 1/2 day or less, plus the equivalent of 1/2 day attendance for preparation. [ 61 ] I draw the attention of counsel to rule 10.48(2) and the warranty that is required in Form 44 (Bill of Costs). CANA Management is entitled to input tax credits and therefore the GST that it pays is refundable under the Excise Tax Act .

GST is therefore not recoverable in an award of costs here. [ 62 ] If there is some reason why costs should not be awarded in this manner, counsel may contact the court within three weeks of the date of release of this endorsement. Otherwise, costs will be awarded using these general directions. They are, of course, payable forthwith as in the general course. Application made by desk application . Dated at the City of Calgary, Alberta this 17 th day of June, 2021. A.R. Robertson, Q.C. M.C.C.Q.B.A. Appearances:

Robert S. Joseph Prowse Chowne LLP for the Applicant (Defendants) Tom Brookes Gowling WLG for the Respondent (Plaintiff)