JMB Crushing Systems Inc (Re), 2021 ABQB 8

Court of Queen’s Bench of Alberta Citation: JMB Crushing Systems Inc (Re), 2021 ABQB 8 Date: 20210106 Docket: 2001 05482 Registry: Calgary In the Matter of the Companies’ Creditors Arrangement Act , R.S.C. 1985, c.

C-36 , As Amended And in the Matter of the Compromise of Arrangement or Arrangement of JMB Crushing Systems Inc and 2161889 Alberta Ltd And in the Matter of the Compromise of a Plan of Arrangement of JMB Crushing Systems Inc and Mantle Materials Group Ltd Between: Jerry Shankowski and 945411 Alberta Ltd R Bee Aggregate Consulting Ltd, Matt Silver Trucking Ltd, JR Paine & Associates Ltd, Shamrock Valley Enterprises Ltd, and Quest Disposal & Recycling Inc Applicants - and - JMB Crushing Systems Inc, 2161889 Alberta Ltd and Mantle Materials Group Ltd Respondents _______________________________________________________ Memorandum of Decision of the

Honourable Madam Justice K.M. Eidsvik _______________________________________________________ [ 1 ] The present application before me is to determine whether there is a valid express trust obligation provided for in the Supply Contract between JMB Crushing Systems Inc (“JMB”) and the MD of Bonnyville No. 87 (the “MD”) in favour of the Applicants. Overview [ 2 ] Mr. Jerry Shankowski is the President and sole director of 945411 Alberta Ltd (“945”). 945 is a gravel pit owner and subcontractor to JMB. It brought several applications in this CCAA restructuring on November 6, 2020.

All the applications arise out of the submission that there is a trust provision in the Supply Contract between JMB and the MD in favour of JMB’s subcontractors for the cost of products and services provided to the MD by them. [ 3 ] Other subcontractors of JMB, R Bee Aggregate Consulting Ltd (“RBEE”), Matt Silver Trucking Ltd (“Silver Trucking”), JR Paine & Associates Ltd (“JR Paine”), Shamrock Valley Enterprises Ltd (“Shamrock Valley”), and Quest Disposal & Recycling Inc (“Quest”), joined in some, but not all, of the applications (the “Subcontractors”). [ 4 ] The first two of the applications, sought only by 945, were for an Order setting aside the Amended and Restated Mantle Sale Approval and Vesting Order and the Reverse Vesting Order, which were granted on October 16, 2020. [ 5 ] The second application was to have the assignment of the Amended Royalty Aggregates Agreement between 945 and Mantle Materials Group Ltd set aside.

In short, 945 sought to have the Orders and assignment set aside on the basis that they had not been given notice of the provision in the Supply Contract that it submits, creates a trust. Both of these applications were dismissed on December 7, 2020 with reasons that can be found at 2020 ABQB 763 . [ 6 ] On December 7 and 8, 2020, I heard another part of the applications which was to determine if a trust exists in favour of the Subcontractors. They sought to have JMB declared a trustee by virtue of paragraph 26 of the Supply Contract, and the Subcontractors as beneficiaries.

This part of the application was joined by RBEE, Silver Trucking, JR Paine, Shamrock Valley, and Quest. The issue of priorities between the alleged trust beneficiaries and others was set over. The alleged trust provision [ 7 ] Paragraph 26 of the Supply Contract provides; 26.

From the amounts paid to JMB by the MD, JMB is deemed to hold that part of them in trust which are required or needed to pay for any salaries, wages, compensation , overtime pay, statutory holiday pay, vacation pay, entitlements, employee and employer Canada pension plan contributions, employee and employer employment insurance contributions, Worker’s Compensation premiums and assessments, income taxes, withholdings, GST and all costs directly or indirectly related to the Product and Services .

JMB shall pay the foregoing from such trust funds . (bolding mine) [ 8 ] The Supply Contract defines “Product” and “Services”, respectively, as: 1.e. “Product” means the production by JMB of the aggregate described in this agreement which includes the crushing and cleaning of rock/gravel, and all related services whereby rock/gravel is made into usable crushed aggregate for the MD in accordance with the required specifications set out in this agreement; f. “Services” means the hauling and stockpiling of crushed aggregate by JMB as set out in this agreement and anything else which is required to be done to give effect to this agreement.

Parties’ Positions Subcontractors’ position [ 9 ] The Subcontractors take the position that paragraph 26 of the Supply Contract meets the test of the three certainties that create an express trust. [ 10 ] Firstly, there is certainty of the intention of the MD to create a trust which can be simply gleaned by the words that suggest that there is a need to hold funds in trust.

The MD intended to ensure that costs indirectly or directly related to the Products and Services, as defined would be paid from the funds paid to JMB. [ 11 ] Secondly, there is certainty of the subject matter here since in May, 2020, pursuant to the Order of May 20, 2020, $3.563,768.40 owed by the MD to JMB was paid to the Monitor, and $1.85M was set aside for Subcontractors’ liens to be dealt with pursuant to the process determined in the Order.

The property is ascertainable and the amounts that are required to pay can be determined on the evidence. 945 noted that it was seeking its payments of its March and April 2020 invoices from these funds. It submitted that it

would have to rely on tracing remedies to access trust funds paid out for its December 2019 invoices. Each Subcontractor argues that it has various similar outstanding invoices to JMB that can be ascertained. [ 12 ] Thirdly, the Subcontractors maintain that there is certainty of object. Paragraph 26 creates a wide net of those who have provided Product and Services – but again, they are ascertainable. [ 13 ] The Subcontractors point out that the trust was created outside and before the CCAA proceedings and the funds set aside should be used to pay them out.

They also have tracing claims that will be dealt with on another day. [ 14 ] Finally, 945 alleges that if Paragraph 26, is not an express trust, then the funds should be considered a constructive trust since it would be unconscionable to allow JMB to take the benefit of these funds without paying the subcontractors who created or generated the efforts or materials supplied to it. JMB would be unjustly enriched and it would create a windfall to JMB. JMB’s position [ 15 ] JMB asserts that paragraph 26 of the Supply Contract does not create a trust.

Firstly, upon reviewing the whole of the Supply Contract it is clear that there was no intention to create a trust. The provision was put in to contractually protect the MD. A review of the Supply Contract shows that it can be varied, assigned or terminated without concern about any trust beneficiary. There is no survival of paragraph 26. This does not work with a trust provision. [ 16 ] Further, JMB argues, in terms of contractual

interpretation, based on the ejusdem generis rule, the Subcontractors were not intended to be protected. There is a long list of obligations in the paragraph but there are none that suggest an intention to include obligations to third parties. Rather, the intention, when coupled with other sections in the Supply Contract is to shield the MD from potential liability. [ 17 ] Secondly, JMB submits that there is no certainty of subject matter since the Supply Contract is an annual contract in that the monies paid to JMB are based on the aggregate delivered during each contract year.

There is no certainty as to whether a subcontractor would have a claim to monies paid in a prior contract year in which it did not do any work for JMB in relation to the Supply Contract. [ 18 ] Finally, with respect to the certainty of object, JMB argues that it is not possible in paragraph 26 to determine the totality of the membership of the class that is supposed to be a beneficiary. For instance, in the 2020 year, JMB allocated overhead costs of equipment repairs, fuel, accommodation to various projects.

The line to determine who is in and who is out is uncertain and not ascertainable as it is too wide. [ 19 ] With respect to 945’s alternative argument if this is not an express trust, that it is a constructive trust, JMB points out that it is not a fiduciary but that they are rather in a debtor-creditor relationship. ATB’s position [ 20 ] ATB Financial opposed the finding of a trust creation in Paragraph 26, but concentrated its arguments on priority issues should a trust be found to exist which may be dealt with on another day.

Factual Background [ 21 ] I outlined some of the factual background in this matter in my earlier decision (see para 8 in 2020 ABQB 763 ). A few more facts are necessary to determine the issue presently before the Court: whether a trust obligation can be found in Paragraph 26 of the Supply Contract. The following is a

summary of the necessary facts for this application. 1. The Initial Order which placed JMB and 216 into receivership pursuant to the CCAA was granted on May 1, 2020. 2. Jeff Buck, the President and Chief Executive Officer of the applicant JMB, swore an Affidavit dated April 16, 2020 in support of the Initial Order. He disclosed at paragraph 33, that JMB had a number of material contracts including a “Supply Agreement with the Municipal District of Bonnyville No. 87 for the production, hauling and stockpiling of crushed aggregate materials for use in road construction.” (the “Supply Contract”). 3.

The Supply Contract was entered into in November 2013 for a 10 year term. JMB was to supply a minimum of 200,000 tonnes of Product a year. It was to deliver and stockpile the Product at various locations in the MD. The MD would then use the Product as necessary on various projects. 4. The Supply Contract has invoicing provisions (paras 18 to 27) for JMB’s Product and Services. For instance, 50% of crushing services per tonne is to be invoiced bi-weekly and the remaining 50% when the Product is delivered and stockpiled.

The undisputed amounts of the invoices are to be paid within 30 days and all invoices for any calendar year are to be submitted by December 31. Paragraph 26 finds itself in the invoicing

section of the Supply Contract.

5. No specific projects are mentioned in the Supply Contract – nor any restrictions on the use of the aggregate product by the MD. According to the Monitor, it does not mention or provide for any specific rights in favour of the MD concerning subcontractors, lien claims, holdback, or other standard provisions typically found in prime construction contracts. It does have indemnification provisions (paras 37, 39 and 41) and Paragraph 26, as mentioned. But there is nothing specific in there about subcontractors. 6. It was JMB’s practice to allocate identifiable costs, including indirect costs, to various projects.

For the 2020 contact year, those indirect costs included costs for equipment repairs, fuel, and accommodation. For prior years, costs for items like portable toilets and waste receptacles were allocated. 7. At the time of the Initial Order, the MD of Bonnyville owed approximately $3.5 million to JMB. 945 and Silver Trucking, had filed liens against land owned by the MD wherein a stockpile of aggregate had been placed by JMB. Further, RBEE and Shamrock Valley, had sent notices to the MD advising that JMB was in default of their respective accounts.

JMB advised the MD that JR Paine had also not been paid for its gravel testing. 8. A series of emails dated April 29, 2020 between JMB and the MD, were attached to JMB’s Chief Restructuring Officer’s Affidavit dated November 20,2020, Blake Elyea. The conversation was with respect to subcontractors not being paid and the timing of the payments of certain invoices. JMB asked the MD when it could expect payment on its invoices “assuming all lien’s (sic) are deregistered by May 5 th ”. The answer was within 14 days assuming all issues had been resolved.

It is clear from these invoices that the MD was concerned about unpaid subcontractors. No mention was made of the need to hold funds in trust for these payments however. 9. The Monitor opined that the MD receivable payment was necessary to allow JMB to continue operations, but the MD would not pay it until the liens were discharged and a process for addressing such claims was established. 10. Accordingly, on May 20, 2020 a Lien Claims Process Order (the “Lien Order”) was put into place to allow the MD to remit the funds to the Monitor in trust to deal with the lien claims.

The amount of the lien fund was determined by calculating the outstanding subcontractor payments owed that the Monitor was aware of and adding a little cushion – for an amount of $1.85M. The MD was represented by counsel and he did not raise any trust issues pursuant to Paragraph 26 or otherwise, beyond those provided for in the Builder’s Lien Act . 11. Six lien claims were received by the Monitor, all of which were determined to be invalid due to the nature of the Supply Contract and work performed thereunder. 12. The lien claim for 945 included invoices for March and April 2020.

The total owing for aggregates removed by JMB and dedicated to the project of the MD was $424,674.05, including GST. The claim for RBEE was in the amount of $1.271M, JR Paine’s was $64K, Shamrock Valley’s was $19K, Silver Trucking’s was $16K and UAV Imaging Inc’s was $5K. Quest did not file a lien claim. 13. 945’s lien was denied on July 27, 2020, more specifically on the basis that the material supplied by 945 was not supplied on or in respect of an “improvement” and it was not registered against the Lands or any lands owned by the MD.

Further, there is no connection between the Shankowski Royalty Agreement and the Supply Contract. This agreement is not as such a sub-contract and it is not a typical supplier of materials or labour but rather a royalty beneficiary. 14. REEB’s lien for rock and gravel crushing services was denied more specifically since its lien against the MD Lands was filed on May 29, 2020, 53 days after it had last provided services – so it was out of time. 15.

The Monitor also took the position that to the extent any lien claim was asserted against the MD’s roads, such claims are “likely invalid” as a result of s. 7(1) of the Builder’s Lien Act which states 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.” 16. In this latter regard, it is notable that Shamrock also served upon JMB and the MD written notice of its trucking claim pursuant to s. 14 of the Public Works Act , RSA 2000 c. P-46 .

Ultimately, counsel advised during argument that this notice was also unsuccessful because the MD took the position that there was no government contract involved and it was not an agent of the Crown.

17. Counsel for 945 and RBEE disputed the Monitor’s Lien Determination. The Lien Dispute applications were scheduled to be heard October 22, 2020. 18. The Monitor paid out some liens, continued to hold the portion that has been disputed by JMB and RBEE ($1.85M – the “Holdback Fund”) and paid out the difference to JMB. 19. 945 was first provided with a copy of the Supply Contract on October 9, 2020 by its attachment as Exhibit “C” to the unfiled Affidavit of Jason Panter sworn October 9, 2020.

This affidavit was provided to support an application to remove liens that had been filed against 945’s land also scheduled for October 16, 2020. 20. The alleged significance of paragraph 26 of the Supply Contract was first discovered by 945’s counsel on October 17, 2020 when he was preparing for questioning on Mr. Panter’s affidavit and the affidavit of Mr. Blake Elyea in preparation for the October 22, 2020 application. 21.

On the morning of October 20, 2020, counsel for 945 advised that he would be seeking an adjournment of his client’s application as he wished to amend it to seek additional relief including a declaration that paragraph 26 of the Supply Contract created a trust for 945 and other subcontractors, amongst other relief. 22. 945 learned in late October, by a call from JMB’s counsel, that there was an error in the April invoice since the wrong price was ascribed to certain aggregate. 945 also learned that the gravel was used for “asphalt” which required prior consent by 945 – which had not been obtained – and a higher price.

Mr. Shankowski, the principal of 945, swore that he would not have granted consent. 23. Further, in light of the potential trust claim, 945 advised that it had an outstanding invoice from December 2019 from JMB that should be included in the trust claim. The total claim of 945 is now $588,457.61, although as mentioned, part of it will be sought through a tracing claim and part from the holdback amount. 24. In terms of the trust claims, in addition to 945’s claim, RBEE has submitted a claim in the same amount as its lien claim. The same can be said for JR Paine, Silver Trucking and Shamrock. 25.

Quest had not made a lien claim but made a trust application on November 17, 2020. Quest provided services such as supplying and maintaining portable toilets and lidded garbage and recycling bins at various sites including within the MD including the MD stockyard, Pit #19, the Shankowski Pit and the Reda Pit. Further, Quest provided services to JMB in pits not located on MD land but were used to supply the MD with gravel and aggregate under the Supply Contract. 26. The value of the Quest services provided within the MD directly was $22,941.14.

In addition, it provided services in the amount of $142,903.57 which it claims may be encompassed by the Supply Contract. It is seeking more information on this detail. JMB denies that any of the latter amount is connected to the Supply Contract – so there is a dispute over this claim. Issue [ 22 ] The sole issue on this application is whether the Supply Contract gives rise to an express or constructive trust in favour of the Applicant Subcontractors. Analysis [ 23 ] The law on the test to determine whether there is a trust created is settled.

As stated in Century Services Inc v Canada (Attorney General) , 2010 SCC 60 at para 83 : Creation of an express trust requires the presence of three certainties: intention, subject matter, and object. Express or “true trust” arise from the acts and intentions of the settlor and are distinguishable from other trusts arising by operation of law (see D.W.M. Waters, M.R. Gillen and L.D. Smith, eds., Waters’ Law of Trusts in Canada (3 rd ed. 2005), at pp. 28-29, especially fn42). [ 24 ] If any of these certainties do not exist, then the trust fails to come into existence, or is void (DMW Waters, Waters’ Law of

Trusts in Canada, 3rd ed (Toronto, Carswell, 2005) at p 132). [25] I will discuss the issue of whether a trust was created here by reviewing the situation under each of the three certainties. 1.

Intention [26] The parties were ad idem that the law states that a Court should not be concerned with the technical wording of an allegedtrust, but should look at the evidence to determine whether the settlor intended to create a trust. [27] As discussed briefly above, the Subcontractors take the position that the wording of paragraph 26 clearly indicates anintention on the part of the MD to create a trust in favour of those who have incurred costs to provide Product or Services to JMB inrelation to the Supply Contract. [28] JMB on the other hand, takes the position that upon a review of the whole of the Supply Contract, there is no intention tocreate a trust in favour of the Subcontractors, but rather it was to protect the MD from liability once it had paid JMB for the Product andServices. [29] If one narrowly interprets paragraph 26 in light of the present circumstances that arose in May of 2020, it is tempting to findthat the “amounts paid” (the payment of the receivable to the Monitor here) were being held as if it was a trust held by JMB pursuant tothe terms of the Supply Contract.

Indeed, the words of paragraph 26 may suggest that very thing.

Further, it is clear from theconversation between the MD and JMB prior to the receivable being paid, that the MD wanted to ensure that it would not faceunsatisfied liens and it was concerned about unpaid subcontractors. [30] However, when considering a broader view of the context and surrounding circumstances of the situation between the partiesand how the parties to the Supply Contract dealt with their respective positions over time, it is questionable whether the Subcontractorshave proven affirmatively that the MD intended to create an irrevocable trust in favour of subcontractors with an undetermined portion ofthe funds that it paid JMB. [31] In order to determine the intention of the MD in this case, the context and surrounding circumstances here are important: seeRoyal Bank v Eastern Trust Co, (PE SCTD), 32 CBR 111 (PEI TD) at para 13, Jin v Ren, 2015 Carswell Alta 251(ABQB). [32] The Court of Appeal outlined the principles governing contractual

interpretation , including: 1) that the Court is to determinethe objective intent of the parties (and here the intent of the MD is paramount) at the time the contract was made, which is “what areasonable person would objectively have understood from the words of the document read as a whole and from the factual matrix”; and,2) where there are disputed contractual terms, they must be interpreted in light of the contract as a whole: see IFP Technologies(Canada) Inc v Encana Midstream and Marketing 2017 ABCA 157 at paras 79-88. [33] Firstly, I reference the overall working of the Supply Contract.

The MD hired JMB to obtain and supply aggregate that it canuse in various projects at various times. JMB must provide a certain amount of aggregate over a particular calendar year but where andhow it sources the product is not determined – it can come from any number of pits and engineering work can be done on different pilesof gravel that can be sent off in various directions.

The amount paid to JMB also is determined on the volume of aggregate crushed, andlater delivered, on a continual basis. [34] Paragraph 26 states “From the amounts paid to JMB by the MD, JMB is deemed to hold that part of them in trust which arerequired or needed to pay for…” and it then lists a series of payments that JMB may owe for salaries, government obligations (CPP, EI,WCB, income tax, GST) plus “all costs directly or indirectly related to the Product and Services” (as defined to include “anything elsewhich is required to be done to effect this agreement”). [35] There is no direct evidence about the intention of the parties when they entered into this agreement.

However, we have afactual matrix of how it was managed in practice. [36] It is clear that the parties never operated in a fashion that suggested that any part of the MD funds were being transferred “intrust” – despite paragraph 26. As noted in Mohr v CJA

(1989) BCJ No 2519 (BCSC), the words “in trust” are not necessarilydeterminative of intention. [37] A review of what happened here is an example. The MD owed approximately $3.5M to JMB in April 2020. If the MDintended that Paragraph 26 created a trust, then shouldn’t it have asked for an accounting for all direct and indirect costs incurred, i.e. anycost “that was incurred to give effect to the agreement” to be set aside – or expect that JMB as trustee would be obligated to do this? Itdid not. Instead, it agreed through counsel to pay the Monitor funds that it understood would be held in

part in trust to potentially pay lienclaims that would be ascertainable through a fixed set of guidelines.

The rest it understood, would be payable directly to JMB. [38] The way that the Subcontractors want this Court to interpret paragraph 26, i.e. that it has such a wide breadth that it includesbasically anything done for the MD via JMB, means that JMB would have to try and determine when any payment was made to it, anyand all costs it had incurred to effect the agreement with the MD (i.e. in relation to the supply of 200,000 tonnes of aggregate a year).Since there is no time delineation and the definition are so broad, this could conceivably include a portion of all costs JMB has tooperate.

Certainly, this amount is much broader that the outstanding claims that were present in April 2020. [39] Indeed, in the early stages of this trust dispute, it became clear quickly that the amount held back by the Monitor would not beenough to satisfy all of the claimants that were coming forward. I have difficulty accepting that the MD intended that that this breadth ofthe amount of its payment should be held in trust by JMB. [40] On the other hand, JMB submits that paragraph 26 should be read down to include only costs that directly relate to potential

liabilities that the MD might incur or be legally responsible for if JMB did not satisfy these obligations (such as the governmental obligations to pay GST WCB, income tax and so on). JMB points to other clauses in the Supply Contract that requires JMB to indemnify the MD in this regard (paras 37, 39 and 41). It also relies on the principle of contract

interpretation in the ejusdem generis rule – that general words and phrases that follow a list of phrases should include only those things that are of the same type listed. [ 41 ] I agree that a narrower

interpretation of paragraph 26 fits more with the overall factual matrix and circumstances of the way that the parties dealt with the Supply Contract over the years. However, it is also difficult to say that only those items listed and that “all costs” should be interpreted so narrowly in light of the very broad definition of “Product” and “Services” that suggests that such limitation is not warranted. [ 42 ] Instead, even if a settlor intended to set up a trust, the putative wording of the trust obligations is not the end of the analysis to determine if one was created. As Justice W.E.

Wilson indicated in Ernst & Young Inc v Central Guarantee Trust Co , 2001 ABQB 92 at para 70 : There is no doubt that it is not sufficient that the parties to an intended trust thought that what they were setting up were trusts. The fact that they are referred to in that way throughout, and that the agreements themselves use that term, is not conclusive .

For a trust to come into existence…three things are needed: those are the certainties… (italics mine) [ 43 ] In my view, the MD’s intention in paragraph 26, and the Supply Contract more generally, was to attempt to protect the MD from liability and generally benefit those who provided Products and Services. However, it is difficult to accept that the MD intended an irrevocable trust in the broad way that paragraph 26 suggests. In any event, I will now turn to the other two certainties that must be met in order to validly create a trust. 2.

Object [ 44 ] “Certainty of object requires that the persons or the class of persons who are intended as beneficiaries must be sufficiently certain so that the trust can be performed”: Bruderheim Community Church v Moravian Church in America (Canadian District) , 2020 ABCA 393 at para 16 . [ 45 ] The class of beneficiaries must be ascertainable at the time that the trust is created so that one can determine if a person is a member of a class of beneficiaries and that the totality of the class is known: Central Guarantee, at paras 83-84, quoting from Waters’ . [ 46 ] Under a literal reading of paragraph 26, the trust is created by “amounts paid to JMB by the MD” and that JMB must set aside the amount it needs to pay the list of all of the costs incurred directly or indirectly to give effect to the agreement.

There is no mention of what persons, corporations, subcontractors, government agencies and others, that are beneficiaries. This must be determined in an indirect way. [ 47 ] Since the trust is to be set aside generally from “the amounts paid to JMB by the MD” with no timeline, and since basically all costs (again with no timeline) are to determine the amount of the trust and the potential beneficiaries, the lack of defined periods means that the payments, the costs, and therefore, the beneficiaries, will constantly be changing and almost impossible to ascertain at any one time.

Such uncertainty does not meet the test of being able to clearly ascertain a class of beneficiaries when the payments are made and an alleged trust needs to be created. [ 48 ] 945s counsel suggested that paragraph 26 should be interpreted to mean that, only 945’s March and April 2020 invoices be considered as payable from the receivable that the MD sent to the Monitor in May. Further, that with respect to the December outstanding invoice, 945 would have to try and determine where and when the MD paid JMB back then and try and trace the funds somehow.

Although this is not an unreasonable way to try and make paragraph 26 workable, this is not what it says. Instead, undetermined costs determine the amount of the trust from undetermined payments, which of course means that the class of beneficiaries at any one point in time is not ascertainable. [ 49 ] For example, how would one really know if the landlord tenant cost JMB incurred arises from the Supply Contract with the MD – or some other project – at the time any payment is made by the MD to JMB?

Paragraph 26 is so broad it could encompass some percentage of basically any of JMB’s costs to operate (since a portion would be necessary to affect the agreement with the MD), making the list of potential beneficiaries expansive and near impossible to ascertain particularly since there are no time guidelines. [ 50 ] In sum, the certainty of object is not met in paragraph 26 of the Supply Contract. 3. Subject [ 51 ] There must be an ability to clearly identify the property that will become the subject matter of the trust.

I have already touched on how this is problematic here. [ 52 ] The Subcontractors argue that the JMB invoices clearly identify the Product and Services provided by the various subcontractors for which JMB is seeking compensation so there is certainty of subject matter when the MD pays invoices. Further, here, $1.85M is clearly being held for lien claims and is easily identifiable.

The Subcontractors argued that if there is a deficiency then JMB must replenish the holdback amount from the amount already paid to JMB. [ 53 ] Interestingly, an example of the difficulty about how to identify the property which is to become the property of the trust, played out in RBEE’s submissions. In its brief, it was suggested that the amount of the trust fund was the $3.5M invoice payment.

Counsel indicated at the hearing however, that in fact the fund was the amount of costs owed that were covered by the invoices of the potential lien claimants – that is, the $1.85M plus any other amounts owed to other potential beneficiaries (such as the disputed amount from Quest). To the extent that money has been paid out to JMB from the $3.5M, it was argued, then the beneficiaries should be able to

trace those funds. But what about other direct and indirect costs and those potential “beneficiaries”? There still may be others out there? As a result, even today, it is not clear from the amounts paid out in the last invoice what the actual alleged trust property is – let alone what should have been set aside “in trust” from other invoice payments. Imagine trying to determine the trust property every time an invoice was paid to JMB from the MD?

The uncertainty is palpable. [ 54 ] Further, RBEE is incorrect in suggesting that only the amounts set out in the latest invoices from JMB to the MD are the amounts that should be considered covered by paragraph 26. In fact, the breadth of paragraph 26 is much wider than that. Not all costs, indirect and direct, will be in any one invoice to the MD so the payments made will not as a result cover all such costs.

This is exactly what creates the uncertainty since the Supply Contract does not delineate with more precision when such payments and any direct and indirect costs from this continuous contract is to be considered as determining a trust fund at any one time. [ 55 ] Considering the nature of this Supply Contract, the amount of the trust fund would be difficult, if not impossible, to properly determine and administer at any one time.

Trying to implement this vague paragraph 26 would have put JMB in a very difficult, if not impossible situation of determining how much to set aside “in trust” before it paid out its other expenses from any funds received from the MD. As a result, the certainty of subject required to find a valid trust has not been met.

Summary on the certainties [ 56 ] In short, the Supply Contract does not create an express trust fund in favour of the Subcontractors. Instead it creates a series of contractual obligations for JMB to generally pay for costs that it incurs directly or indirectly related to the Products and Services provided to the MD. These provisions are set up to attempt to protect the MD from potential liability and generally provide for those who incur costs to provide the Services and Products to the MD. [ 57 ] The creation of the trust fails on all three certainties required to create an irrevocable trust.

The MD did not intend to create a trust for such a broad spectrum of potential beneficiaries who may have provided direct or indirect services and product to the MD. It is uncertain how much and when such costs were to be paid and to whom at any one time, and from what amounts paid to JMB by the MD, so that the certainty of object and subject is not met. In sum, the alleged trust provision in paragraph 26 is too vague to create an irrevocable trust. [ 58 ] The alleged trust fails since, basically, it is functionally impracticable.

The certainties necessary to find that some portion of the funds paid to JMB by the MD are transferred into an irrevocable trust are not met since the intention, amount of the trust funds and identification of the beneficiaries are not practicably ascertainable. Constructive Trust [ 59 ] 945 argued that if the court did not find an express trust then it should find that the funds are held as a constructive trust and that JMB should not be unjustly enriched. [ 60 ] To find a constructive trust, the Court would have to find that JMB was holding the funds provided to it by the MD as a fiduciary.

If there is no trust provision created by the Supply Contract, as I have found, then JMB is not in a fiduciary position to the Subcontractors to hold any funds. The relationship between JMB and the Subcontractors is a contractual one, plain and simple. [ 61 ] Similarly, unjust enrichment does not apply here. While JMB may owe the Subcontractors funds, based on my findings, subject to their potential lien claims, they are unsecured creditors. Conclusion [ 62 ] In conclusion, I decline to find that the Supply Contract created an express trust.

No portion of the funds paid to JMB by the MD from time to time had to be kept in trust for the wide group of potential beneficiaries, including the Subcontractors, who may have provided direct or indirect Services or Product to JMB at any point in time connected to the Supply Contract. The terms of the Supply Contract, and in particular Paragraph 26, evinced an intention to protect the MD from potential liability and a general effort to protect, amongst others, the Subcontractors here.

However, any putative trust failed because it lacks certainty of intention, object and subject, and would have been impracticable to administer, had the parties ever attempted to do so. [ 63 ] The Subcontractors’ application is dismissed. Heard on the 27 th day of November, 2020. Dated at the City of Calgary, Alberta this 6 th day of January, 2021. K.M. Eidsvik J.C.Q.B.A.

Appearances: Richard B. Hajduk for the Applicants Mr.

Jerry Shankowski and 945411 Alberta Ltd Tom Cumming, Caireen Hanert, Alison Gray, and Stephen Kroeger for the Respondents JMB Crushing Systems Inc and 2161889 Alberta Ltd and Mantle Materials Group, Ltd P antelis Kyriakakis and Nathan Stewart for the Monitor FTI Consulting Ltd Tom Gusa for ATB Financial Kyla Mahar for Fiera Private Debt Fund VI LP et al Tristen Cones for Canada Revenue Agency Adam Ollenburger for Kalinko Enterprises Ltd Terence Arthur for Quest Disposal and Recycling Inc Jerritt Pawlyk for R Bee Aggregate Consulting Ltd and Matt Silver Trucking Christina Tchir and Kaley Shier for Shamrock Valley Enterprises Ltd Peter Alexander for JR Paine & Associates Ltd Darrell Peterson for Jeff Buck Melissa Burkett for Alberta Environment and Parks Gavin Price for Gowling LLP counsel