Tempo Alberta Electrical Contractors Co Ltd v Man-Shield (Alta) Construction Inc, 2021 ABQB 627

Court of Queen’s Bench of Alberta Citation: Tempo Alberta Electrical Contractors Co Ltd v Man-Shield (Alta) Construction Inc, 2021 ABQB 627 Date: 20210811 Docket: 1703 06075 Registry: Edmonton Between: Tempo Alberta Electrical Contractors Co. Ltd. Appellant - and - Man-Shield (Alta) Construction Inc. Respondent _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ Introduction [ 1 ] This is an appeal from a Master’s decision to substitute cash for a lien bond.

For reasons which follow the appeal is dismissed. Background [ 2 ] All agree the standard of review is correctness: Bahcheli v Yorkston Securities Inc. , 2012 ABCA 166 .

[ 3 ] By way of a June 30, 2017 Consent Order cash of $1,199,439.15 was deposited as security for the lien claim of the appellant (“Tempo”). On June 3, 2020, Master Birkett ordered a lien bond to take the place of the respondent’s (“Man-Shield”) cash security. [ 4 ] Through counsel, both parties agree that the issue is whether it is appropriate to substitute a lien bond for the cash security originally deposited in relation to a certain lien under s 48 of the Builders’ Lien Act RSA 2000, c B-7 (the “ Act ”).

Analysis [ 5 ] Tempo argues the Master’s order substituting cash for the bond was contrary to the intentions of the Act .

It was also unfair in that it failed to appreciate “the extensive factual record and the nature of the dispute between the parties”. [ 6 ] Tempo argues the result is unfair because Man-Shield has not paid for certain disputed work but is now allowed the use of the cash initially deposited in relation to it. [ 7 ] Tempo argues further that an appreciation of the facts of the case – and of the “spurious” nature of Man-Shield’s failure to pay the disputed claims – must be taken into account when deciding whether to substitute the bond for the cash. [ 8 ] Man-Shield says the bond is as good as cash. [ 9 ] It says further that the facts of the dispute are not settled, and so not relevant to the narrow point before the Master, and now this court. [ 10 ] Tempo argues the Act does not contemplate that while parties are in litigation, a contractor – against whom money claims are made – should have use of the very cash the subcontractor says is owing to it. [ 11 ] Tempo argues the following intentions of the Act are relevant to its appeal: that the Act intends to ensure the orderly flow of cash and capital in the cause of the completion of construction projects; and that it intends to ensure that “payments for construction… do not leave the contractual chain and are used to pay persons performing the work”. [ 12 ] Tempo argues the difference between security for a construction project that is underway as distinct from a construction project that is substantially complete.

It argues the Act intends, in the latter case, that cash/holdback funds not be diverted before reaching unpaid contractors. [ 13 ] Tempo relies on Maple Reinders Inc v W. Dalton Energy Corp , 2007 ABCA 247 at 31, and Iona Contractors Ltd v Guarantee Company of North America , 2015 ABCA 240 , at paras 20-23 . [ 14 ] I am unable to agree that the Master’s impugned order to convert the Tempo’s security to a lien bond is at all contrary to anything said in these authorities. [ 15 ] Tempo says it is “incredibly unfair” that Man-Shield has the use of its cash while the litigation continues.

I see no greater unfairness where a lien bond has been ordered. There is no question that the lien bond is ‘as good as cash’ in terms of recovery.

Pending the outcome of the litigation, Tempo has no greater access to Man-Shield’s cash than to the lien bond. [ 16 ] Further to this point, Tempo makes little argument that at the end of the day in the litigation it will be prejudiced in its recovery of cash, as distinct from realizing on the bond, should the litigation be decided in its favour. [ 17 ] On the evidence, Tempo’s best case for prejudice is that the respondent will have “no motivation to settle and the funds would be used to fund the litigation against [Tempo]” (written submission of May 13, 2021). [ 18 ] Likewise, at para 87 of its Brief, Tempo says: [The impugned Order] amounts to a short-circuiting of the litigation in Man-Shield’s favour and allows Man-Shield to use the Cash even though the record is clear that Tempo has not been paid for a great deal of work it did so that the construction of the Project could be completed. [ 19 ] At para 90 of the same Brief, Tempo says that from its perspective the effect of Master Birkett’s order “…borders on giving Man-Shield judgment in the litigation”. [ 20 ] I am unable to agree with this characterization.

Clearly the litigation is ongoing. What will or will not motivate the parties to settle is between them. There is much speculation but no evidence – even if it is relevant – that the respondent is using the cash to fund its litigation against the appellant. [ 21 ] Tempo argues that by way of s 22 of the Act the cash the respondent agreed to deposit in 2017 is impressed with a trust.

Tempo puts it this way at para 81 of its Brief: It is not for [the respondent] to have the Cash for things not related to the Project pending resolution of the litigation just because it posts a lien bond”. [ 22 ] On my reading of the Act as a whole and on the authorities and arguments of counsel, I am not persuaded that any trust impressed by s 22 of the Act is at all compromised where a lien bond is substituted for cash. [ 23 ] Further written submissions were received from counsel following a related decision of Master Summers on April 26, 2021.

I agree with the submissions of counsel for the respondent that Master Summers’ decision has no bearing on what I have to decide. Master

Summers made certain findings about litigation in which the parties are involved. While perhaps related, no one suggests that those findings dispose of the litigation in relation to which the lien bond is deposited. Conclusion [ 24 ] For the reasons given, the appeal is dismissed. The respondent is entitled to its costs. Heard on the 23 rd day of February, 2021. Further written submissions May 6 and 13, 2021 Dated at the City of Edmonton, Alberta this 11 th day of August, 2021. Peter Michalyshyn J.C.Q.B.A. Appearances: Jose A. Delgado Bishop & McKenzie LLP for the Appellant Kevin Burron Burron Law for the Respondent