1406676 Alberta Ltd Applicant/Respondent - v. -, 2021 ABQB 822

Court of Queen’s Bench of Alberta Citation: 1406676 Alberta Ltd v Five Star Engineering Inc, 2021 ABQB 822 Date: 20211018 Docket: 1703 02277 Registry: Edmonton Between: 1406676 Alberta Ltd Applicant/Respondent - and - Five Star Engineering Inc Respondent/Appellant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice B.R.

Burrows _______________________________________________________ [ 1 ] Five Star Engineering Inc appeals a decision of a Master which struck liens it registered under the Builder’s Lien Act , RSA 2000, c B-7 for not having been registered in time – that is, within the “45 days from the day that the performance of services is completed or the contract to provide the services is abandoned.” ( BLA s. 42(1)(b)) [ 2 ] Five Star registered the liens in respect of design and inspection services it provided in connection with the construction of two buildings, one on each of two neighboring lots owned by 1406676 Alberta Ltd. in Fort McMurray, Alberta. [ 3 ] The liens were registered on January 20, 2017.

Five Star’s position is that the last services it performed were performed within the 45 days preceding that date.

[ 4 ] 140’s position is: - that the services provided by Five Star were provided pursuant to two distinct contracts – (1) a contract between Five Star and the general contractor, Twister Developments Ltd., which 140 had retained to build the buildings, but whose contract was terminated by 140 before construction was complete, and (2) a subsequent contract directly between Five Star and 140; - that the services provided by Five Star in the 45 days preceding January 20, 2017 were provided pursuant to that second contract exclusively, and 140 paid for them. - that the services for which Five Star has not been paid and for which it has filed the liens were provided under its contract with Twister significantly more than 45 days before the liens were registered. [ 5 ] Counsel for Five Star submitted that the liens were valid because there was a “prevenient arrangement” between Five Star and 140 pursuant to which Five Star provided the services it did.

The Master rejected that submission. He held that no prevenient arrangement existed. [ 6 ] As will appear, in my view Five Star’s liens are valid because 140, dealing directly with Five Star from the start of the project, and especially after it terminated Twister during construction, requested and accepted Five Star’s services up to and including the last service which was provided within 45 days of the day the liens were registered. In my view, 140’s effort to characterize the last service as having been performed under a separate contract fails.

I find it unnecessary to consider whether or not the term “prevenient arrangement” would accurately describe the relationship between Five Star and 140. [ 7 ] I allow the appeal. Here is my reasoning: Procedural History [ 8 ] 140 commenced these proceedings on February 2, 2017 by Originating Application seeking an order allowing 140 to pay the face value of the liens into court to stand as security in place of the liens.

It appears the requested Order was granted and that 140 paid the funds into court. [ 9 ] On February 23, 2017, 140 filed and served a Notice to Prove Lien on Five Star. [ 10 ] Five Star responded by filing the affidavit of Albert Biel, the president of Five Star, on March 9, 2017 [“Biel Affidavit #1”]. Mr.

Biel was cross examined on his affidavit on June 28, 2017, and the transcript of the cross-examination is on the court file. [“Biel Cross-Examination”] [ 11 ] Thereafter the parties filed pleadings including Five Star’s “Statement of the Plaintiff’s Claim”, 140’s Statement of Defence and Counterclaim, Five Star’s Statement of Defence to Counterclaim, and Twister’s Statement of Defence. [ 12 ] On November 30, 2020, 140 filed an Application for an order declaring Five Star’s liens invalid and directing the Clerk of the Court to release the funds that 140 had paid into court. 140 filed the Affidavit of Ward Fleming, sworn on November 24, 2020, in support of its application. [“Fleming Affidavit”] Mr.

Fleming was not cross-examined on the Fleming Affidavit. [ 13 ] Five Star filed the affidavit of Albert Biel, sworn January 7, 2021, in response to 140’s application [“Biel Affidavit #2”]. Mr. Biel was not cross-examined on Biel Affidavit # 2. [ 14 ] 140’s application was heard by a Master who issued a Chambers Endorsement on March 3, 2021 granting 140’s application. The Master’s Endorsement was filed on April 26, 2021. [ 15 ] On May 12, 2021, Five Star filed a Notice of Appeal of the Master’s Order.

The Arrangements by which Five Star Provided Services [ 16 ] The evidence indicates that in early 2015, 140 was in discussions with Twister regarding building two buildings, one on each of two neighboring lots which 140 owned in Fort McMurray. In appears that Five Star was brought into those discussions, in particular with regard to the design and inspection services Five Star could provide. [ 17 ] On March 17, 2015, Five Star provided Twister with a written proposal as to the scope of work it would do and the cost of that work. The proposal listed 12 specific services Five Star would provide.

The last of the 12 was “Final Architectural Inspection.” The total cost of Five Star’s services in relation to the two buildings in the proposal was $116,000.00. [ 18 ] Though the proposal was addressed to Twister, 140 and Five Star had direct communications about the project and Five Star’s role in it, immediately after the date of proposal. Twister forwarded the proposal to Mr. Ward Fleming of 140 and Mr. Fleming responded directly to Five Star on March 19, 2015. [ 19 ] In that direct response, Mr. Fleming asked Mr.

Biel, amongst other things, “Could you do it for $100,000 for both rather than $116,000 (+gst of course)”. It appears that Mr. Fleming was attempting to negotiate directly with Mr. Biel as to the terms by which Five Star would provide the services listed in the proposal. [ 20 ] The materials do not indicate what discussions or correspondence that inquiry generated, but on March 25, 2015, Mr. Fleming advised Mr. Biel, “Hi Al, I’m good with your quote. Spoke with Greg [Greg Goodvin of Twister] this morning. Don’t wanna lose any

momentum.” [Biel Affidavit #2, Ex. A] [ 21 ] In response to Mr. Fleming’s approval of Five Star’s quote, Mr. Biel organized a “kick off meeting” of Mr. Fleming, Mr. Goodvin and himself later in the same week. So, the evidence indicates that Mr. Fleming was involved directly with Five Star from the very start of Five Star’s involvement in the project, and that his involvement included directly approving the proposal which Five Star had presented setting out the services it would provide and their cost, and discussing matters relevant to Five Star’s services directly with Mr. Biel.

This all occurred before 140 contracted with Twister. [ 22 ] I note that in the Fleming Affidavit, Mr. Fleming swears (in para. 6), “140 was never provided a quote or any other form of engagement for the Work.” At least the first half of that sentence appears to be inaccurate or at least, incomplete. The evidence described in paras [18],[19],[20] and [21], establishes that 140 received and dealt with Five Stars proposal and quote – though it was addressed to Twister. [ 23 ] 140 and Twister entered a contract for the construction of the buildings by Twister on May 26, 2015.

If there was any formal contract by either 140 or Twister with Five Star, it is not in evidence. When Five Star actually commenced the design work, and whether or not it was before or after 140 and Twister entered their contract, is not in evidence – but it would make sense that Five Star had completed much of the design work before Twister and 140 agreed on a price for Twister’s work and entered their contract.

At any rate, the design work was done and Twister commenced construction. [ 24 ] On July 6, 2016, 140 terminated its contract with Twister and, as I understand it, retained another contractor to complete construction. [ 25 ] The evidence does not discuss the reason for this termination in any detail. Mr. Fleming, in para. 8 of the Fleming Affidavit, swears it was a result of Twister’s default. Earlier Mr.

Biel, when cross-examined on Biel Affidavit #1, indicated that his understanding was that 140 was buying Twister out of its contract and retaining another contractor that had some ownership interest in the project. [Biel Cross-Examination, page 25] [ 26 ] The evidence includes an email dated July 11, 2016 from 140 to Twister which is in the form of a contract between 140 and Twister regarding the termination of Twister’s building contract.

It includes the following provision: Al Biel – Five Star Engineering Inc The owner [140] shall be responsible to pay Five Star Engineering Inc. the remaining balance of the agreed upon fees. The exhibited copy of this agreement is signed by Mr. Fleming on behalf of 140. (Biel Affidavit #2, Exhibit C). Mr. Fleming did not mention this email in his affidavit. 140 has not provided any evidence in relation to it. [ 27 ] Mr.

Biel has deposed that after the termination of Twister, Five Star carried on with the provision of design and inspection services for the project as the “coordinating registered professional for the two buildings.” [ 28 ] Mr. Fleming deposed (Fleming Affidavit, para. 9) Five Star did not provide any additional Work to the General Contractor [Twister] in relation to the Project after July 6, 2016. [ 29 ] That statement appears to be true – Five Star did not provide work to Twister after July 6.

But Five Star clearly did continue with the work it had undertaken to do in the original proposal, and dealt directly with Mr. Fleming in that regard. In particular: - Five Star conducted inspections of the buildings on July 28, 2016 and provided written reports to Mr. Fleming. (Biel Affidavit #2, Exhibit D) - On August 30, 2016 Mr. Biel attended a meeting apparently called by Mr. Greg Wolf, the Chief Building Safety Codes Officer of the Regional Municipality of Wood Buffalo, to address issues arising from Mr. Wolf’s inspection of one of the buildings. Mr. Fleming also attended the meeting.

The new general contractor forwarded Mr. Wolf’s correspondence following that meeting to Mr. Biel, amongst others, and appears to have asked for Mr. Biel’s comments. (Biel Affidavit #2, Exhibit E) - On September 6, 2016, Mr. Fleming forwarded an email he had received from Mr. Damon McGillivray, the Manager of Safety Codes, Planning and Development, Regional Municipality of Wood Buffalo, apparently asking for Mr. Biel’s assistance in responding to it. (Biel Affidavit #2, Exhibit F). - On September 12, 2016, Mr. Biel wrote to Mr.

Fleming explaining an aspect of the design of the mechanical system in one of the buildings. (Biel Affidavit #2, Exhibit I) [ 30 ] Mr. Fleming does not address these points in his affidavit. Neither did he offer any contradictory evidence after Mr. Biel’s affidavit was filed. [ 31 ] The evidence includes the invoices Five Star rendered in respect of its work. The first invoices, one for each building, were issued on August 4, 2015 to Twister, whose contract, at that point, had not yet been terminated.

The invoices appear to have been for the full amount set out in Five Star’s original proposal of March 17, 2015 though all of Five Star’s work was not yet complete as at that day. The invoices were #4289 for $58,800 and #4290 for $63,000. Mr. Biel testified that he issued invoices for the total amounts, even though not all the work had yet been performed, because Mr. Goodvin of Twister asked him to do so. (Biel Cross-Examination, page 22.) [ 32 ] Twister paid a portion of those invoices. The evidence, so far as I can determine, does not indicate when it did so.

It paid a total of $52,230.96. (Biel Affidavit #2, Exhibit J)

[ 33 ] It appears that after receipt of that payment Five Star amended the two invoices to account for the payment. The amount of Invoice 4289 was amended to $25,238.10 +GST and the amount of Invoice 4290 was amended to $27,142,86 +GST. The materials do not include any “Amended Invoice” per se. But subsequent invoices, which I describe in the next paragraph, reference Invoices 4289 and 4290 in these amended amounts. [ 34 ] On September 7, 2016 Five Star rendered two further invoices in respect of its work. These invoices were rendered to 140 directly.

Invoice 4495 for work in respect of one of the buildings was for $30,761.90 +GST being the portion of the amount invoiced in the original Invoice 4289 that remained unpaid. Invoice 4496 was for work on the other building. It was for $32,867.14 +GST which was the amount remaining unpaid on the original Invoice 4290. [ 35 ] Five Star sent the new invoices to Mr. Fleming on September 7, 2016. On receipt of these invoices Mr. Fleming responded to Mr. Biel, “Thanks Al, I’ll submit one of these on the next progress draw and the other on the following progress draw.” Mr.

Fleming made no suggestion at that time that it was not appropriate for Five Star to claim payment from 140 for work done pursuant to Five Star’s original proposal. (Biel Affidavit #2, Exhibit H) [ 36 ] More than a month later, on October 14, 2016, there was further correspondence between Mr. Biel and Mr. Fleming about the invoices. The evidence does not reveal exactly what inspired this correspondence but it appears that Mr. Fleming now had some concern about the invoices Five Star had presented on September 7. In an email to Mr. Fleming, Mr.

Biel explained how the amounts of the September 7 invoices had been determined, though the same information had been set out on the invoices themselves. He indicated that, of the original $116,000 he quoted for his work, Twister had paid $52,430.96, leaving an outstanding balance of $63,619.04. [ 37 ] Mr. Fleming’s response was: (Biel Affidavit #2, Exhibit

J) I guess then my question is why didn’t Twister pay you the full amount I gave them. Twister was paid $55,000 to provide to Five Star Engineering for partial payment. And you received $52,430.96 ($25,288.10+$27,142.86). There is something wrong here. ($2,569.04 missing) [ 38 ] A more extensive version of the email exchange which contained that response was exhibited to Biel Affidavit #1 (Exhibit I). It appears from the complete email chain that Five Star did in fact receive all of the $55,000 which 140 had paid Twister, but had credited the appropriate proportion of it to GST. Mr.

Fleming indicated that he had paid Twister $55,000 plus GST in respect of Five Star’s accounts. When, in the e-mail correspondence, Mr. Biel identified the reason for the discrepancy Mr. Fleming responded, “Okay thanks Al,”. [ 39 ] There was no suggestion in any of Mr. Fleming’s contributions to this e-mail chain that he did not recognize or acknowledge an obligation on the part of 140 to pay Invoices 4495 and 4496 which Five Star had rendered to 140 on September 7. [ 40 ] Mr.

Fleming deposed, [Fleming Affidavit, para. 10.] On October 14, 2016, Albert Biel of Five Star confirmed that the amounts owing by [Twister] for the Work was a total of $63,619.04. Five Star re-issued new invoices to 140 that were originally addressed to [Twister] for the outstanding amount related to the Work. 140 made it clear that it was not responsible for the payment owing by [Twister] for the Work. [ 41 ] On the evidence before me, this paragraph is not totally accurate. There is no indication in the correspondence in evidence that when Mr.

Biel sent the invoices addressed to 140, which are referenced in para. [34] above, he was confirming the amounts “owing by Twister”. The evidence supports the conclusion that Mr. Biel understood that 140 would be paying those invoices. He was invoicing 140 directly. [ 42 ] Further, the statement that 140 “made it clear that it was not responsible for the payment owing by Twister for the Work” is not accurate. At least, 140 did not do so at that time – October 14. As indicated in para. [37] above, Mr. Fleming’s October 14 response to Mr.

Biel’s explanation of the amounts in the invoices contained no suggestion that 140 would not be paying them. And Mr. Fleming’s response to receiving the invoices on September 7 indicated that 140 would pay them. (see para. [35] above.) [ 43 ] The evidence indicates that the first time 140 made any suggestion that it would not be paying Five Star the balance outstanding for its work was in a December 15, 2016 email from Mr. Fleming to Mr. Biel. The email said: (Fleming Affidavit, Ex.

C) Al, Further to our discussions, I confirm that we are prepared to retain your firm directly to complete the final inspections. As you know, we require these inspections to meet the Authority having Jurisdiction’s requirements and without them our project will be significantly delayed. As mentioned by our legal counsel, we are unable to pay you directly for past work due to the nature of your contract and Twister’s refusals. [ 44 ] Mr. Biel’s response indicated that he would be discussing the situation with his lawyer, and expected he would do the final inspection on December 21. He advised Mr.

Fleming that the cost for the “site inspection” [he did not use the term “final inspection”] would be $2000 plus GST which included travel and time and costs. Mr. Fleming responded approving that cost. On December 22, Mr. Biel reported that he had been to Fort McMurray the day before. He said: Hello Ward, I was up and did my inspection yesterday. There were a few minor deficiencies. I can discuss over the phone. Please see the attached invoices along with a statement of account of which are over due.

*not sure who is going to cut the cheque so Greg Goodvin [of Twister] has been cc’d on this email. This statement does not include the extras, they will be invoiced shortly. [ 45 ] In the Fleming Affidavit, Mr. Fleming references this email exchange as evidencing a separate agreement between 140 and Five Star to complete the final inspection of the project. He swears: The New Agreement was made with the understanding that 140 would be retaining Five Star directly, and that Five Star would not be paid directly for any amount outstanding related to the Work provided for [Twister]. [ 46 ] Mr.

Biel’s evidence on the point is in Biel Affidavit #2, para. 19: In December, 2016 Five Star made an agreement with 1406676 Alberta Ltd. for an additional trip to Fort McMurray to approve extra work done by the replacement contractor and to inspect the building. In the affidavit, the words I have put in italics are in handwriting initialed by Mr. Biel. A portion of the originally drafted words for the paragraph have been crossed out. Before the amendment the paragraph read: In December, 2016 Five Star made an agreement with 1406676 Alberta Ltd. to conduct a final inspection of the two buildings .

The words in italics here are the words which are struck out. [ 47 ] If Mr. Biel’s handwritten amendment to para. 19 of Biel Affidavit #2 was meant to dispute the characterization of the inspection which Mr. Biel conducted on December 21, 2016 as “the final inspection”, it is at odds with his evidence in the Biel Cross- Examination, during which he clearly agreed that the December 21, 2016 inspection was the final inspection. (Biel Cross-Examination, page 29 and 30). [ 48 ] Even so, I am satisfied on the evidence that when Mr.

Biel conducted the December 21, 2016 inspection he did so to complete the work he had undertaken in the original proposal he made to 140 and Twister in March 2015. His conduct did not constitute acceptance of a “new agreement” as Mr. Fleming has characterized it. In my view, the correspondence that passed between Mr. Ward and Mr. Fleming, before the final inspection, did not make it clear that Mr.

Fleming was purporting to change the basis upon which Five Star would provide its services so that the final inspection would be entirely separate from all the other services Five Star had provided for 140 and, for a time, for Twister, if that was Mr. Fleming’s intention. [ 49 ] Mr. Biel did not perform the December 21, 2016 inspection knowing that 140 had reneged on its prior commitment to pay for the services for which Five Star had not yet been paid. Mr. Fleming’s email said that 140 would be unable to pay Five Star what was due “directly”.

Given that the partial payment Five Star had received had been through Twister – so not directly from 140 – and given Mr. Biel’s response that he was unsure who was going to “cut the cheque”, the evidence is consistent with Mr. Fleming having meant and Mr. Biel having understood that the rest of what was owed would be paid to Five Star by 140 in the same manner – indirectly through Twister or the replacement general contractor. [ 50 ] It was not until after Mr. Biel had performed the final inspection and had billed the $2000 he had quoted, that Mr.

Fleming stated his position clearly: (letter from 140 to Five Star, December 23, Fleming Affidavit, Exhibit

D) I note that you have also forwarded to us your invoices #s 4495 and 4496 that were originally addressed to Twister Developments Ltd. These invoices appear to have been re-issued to us mistakenly. As mentioned in our email correspondence of December 20 th , your original contract is with Twister Developments Ltd. and your discussions regarding payment should be with them.

Your original work on the project was not pursuant to any contract between 1406676 Alberta Ltd. and Five Star Engineering Inc. [ 51 ] 140’s position in this letter is a total renunciation and abandonment of the undertaking 140 clearly made in the agreement terminating Twister’s contract to pay Five Star all it was owed (see para. [26] above), which undertaking Mr. Fleming confirmed when Mr. Biel originally submitted the invoices to 140 more than three months earlier on September 7 (see para. [35] above) and which undertaking Mr.

Fleming had further tacitly confirmed, by not denying it, when he questioned how the amount of the invoices had been calculated on October 14, 2016 (see paras [36][37] above). [ 52 ] In my view, the evidence establishes on a balance of probabilities, that 140 agreed to take over responsibility for payment under Five Star’s original proposal, requested and received specific services covered by that proposal after it terminated Twister, and did not clearly establish its intention that its request to Five Star to conduct the final inspection was not made pursuant to that original proposal. [ 53 ] Accordingly, in my view, there is a thread that connects that last service provided by Five Star to the services it had previously provided. 140’s apparent efforts to cut that thread did not have that effect. [ 54 ] Accordingly, the day upon which the services Five Star agreed to provide were completed was December 21, 2016.

The builder’s liens, having been registered within 45 days of December 21, 2016, were registered within the time for registration established by the Builder’s Lien Act s. 41(2)(a). [ 55 ] I allow the appeal and set aside the order appealed from. 140’s application to have the liens declared invalid is dismissed. [ 56 ] Five Star, having been successful on this appeal application, is entitled to costs both of this application and of the application before the Master. I tentatively set the amount of those costs at $1350 plus disbursements.

If either party is not content with that tentative costs disposition they may make submissions as to costs in writing of no more than two pages length to be filed and served by November 1, 2021. If such a submission is made, the other party may respond in writing of no more than two pages length by November 15, 2021. If no cost submission is made by November 1, 2021 my tentative costs disposition will be final.

Heard on the 24 th day of September, 2021. Dated at the City of Edmonton, Alberta this 18 th day of October, 2021. B.R. Burrows J.C.Q.B.A. Appearances: Richard Wong for 1406676 Alberta Ltd Jason Van Doesburg for Five Star Engineering Inc