Universal Properties Inc v TRG Developments Corp, 2023 ABKB 151

Court of King’s Bench of Alberta Citation: Universal Properties Inc v TRG Developments Corp, 2023 ABKB 151 Date: 20230314 Docket: 1303 13967 Registry: Edmonton Between: Universal Properties Inc Plaintiff - and - TRG Developments Corp and Kee Installations Ltd Defendants - and - Allan Beach Resort

(2013) Ltd and Randy Ruggles Third Party _______________________________________________________ Reasons for Decision of the Honourable Applications Judge W.S. Schlosser _______________________________________________________

[ 1 ] This is an application under the old provisions of the (now) Prompt Payment and Construction Lien Act , RSA 2000, c P- 26.4 . The central issue is whether TRG Developments Corp (TRG) is a ‘owner’ for the purposes of the Act and subject to the lien claims of Kee Installations Ltd (Kee). Kee brings a cross application for

summary judgment on its lien. [ 2 ] This is an old case going back to 2013. There was a hiatus while the parties went to the Court of Appeal over the requirement to file a certificate lis pendens in a timely way (reported at 2015 ABCA 187 sub nom TRG Developments Corp v Kee Installations Ltd) .

Cases Cited by the Parties K & Fung Canada Ltd v NV Reykdal & Associates Ltd , 1998 ABCA 178 ; Builders’ Lien Act , RSA 2000; Con-Forte Contracting Limited Partnership v Eagle Hill Development Ltd , 2012 ABQB 724 ; Royal Bank of Canada v 1679775 Alberta Ltd , 2019 ABQB 139 ; Royal Trust Corp. of Canada v Bengert Construction Ltd (sub nom Gypsym Drywall (Northern) Ltd v Coyes ), 1988 ABCA 58 ; Labbe- Leech Interiors Ltd v TRL Real Estate Syndicate

(07) Ltd , 2009 ABQB 653 ; Acera Developments Inc v Sterling Homes Ltd , 2010 ABCA 198 ; Georgetown Townhouse GP Ltd v Crystal Waters Plumbing Company Inc , 2018 ABQB 617 ; Synergy Projects (Destiny) Ltd v Destiny Bioscience Global Corp, 2022 ABQB 384 ; TRG Developments Corp v Kee Installations Ltd , 2015 ABCA 187 . [ 3 ]

Section 1(

j) of the Act provides: (j) “owner” means a person having an estate or interest in land at whose request, express or implied, and (

i) on whose credit, (ii) on whose behalf, (iii) with whose privity and consent, or (iv) for whose direct benefit, work is done on or material is furnished for an improvement to the land and includes all persons claiming under the owner whose rights are acquired after the commencement of the work or the furnishing of the material; [ 4 ] The facts may be sketched as follows: [ 5 ] TRG owns some land on the shores of Hubbles Lake. Allan Beach Resort

(2013) Ltd (ABR) wanted to buy it. There were negotiations. ABR was to purchase the land under an agreement for sale with a vendor take-back mortgage. ABR was to lease the land prior to closing. [ 6 ] Two rounds of negotiations ensued; resulting in an agreement for sale in April 2013, a lease prior to completion of the sale, and a ‘discussion term sheet” related to the vendor take-back financing. [ 7 ] The Purchase Contract included (from the Applicant’s brief): a. ABR would complete the purchase on June 26, 2013 (the “Closing Date”); b.

ABR would complete the purchase by way of a vendor take-back mortgage, which was to have a three-year term, be simple interest only with monthly payments, and be fully due and payable at the expiry of the three-year term (the “VTB”); c. ABR would lease the Land and be a tenant in possession of the Land commencing February 1, 2013 until completion of the purchase on the Closing Date; d.

ABR would lease the Land on a net basis (paying for all of its operating costs including taxes in addition to net rent) at a monthly amount of $19,583.33; e. in the event the purchase did not close, ABR would pay for all of TRG’s reasonable costs, including solicitor and client legal fees on a full indemnity basis, to restore title to the Land, enforce a lien against the Land, or regain possession of the Land due to ABR’s default; and f. in the event the purchase did not close, ABR would not be entitled to any reimbursement for any improvements made by ABR. [ 8 ] ABR did not have the means to purchase the land without first improving it to create a revenue stream.

The idea was that it would convert the unimproved land into an RV park and use the money it generated to close the deal. [ 9 ] TRG remained the registered owner of the fee simple interest throughout. TRG was not directly involved in the improvements to create the revenue stream, but they were well aware that the sale of the land depended on the revenue stream arising from the improvements, as did the value of the security to support the vendor take-back mortgage.

While TRG did not request, or direct the improvements, they actively monitored them. [ 10 ] I have read the thoughtful analysis of Graesser J in the Royal Bank case (esp. at paras 140 and following) and the reasoning of the Court of Appeal in the Acera case. To my mind, this is not a case of an incidental benefit to the holder of a reversionary interest, or a case of a consequential benefit to a vendor on the unexpected failure of an agreement of purchase and sale. I am satisfied that this is very much more an Acera case (especially at para 37) than it is a Royal Bank case.

I am satisfied that the facts support that the improvements were made with the implied consent of TRG and, ultimately, to their direct benefit; thus satisfying s 1(j)(iv) of the Act.

[ 11 ] As noted (and like Acera ), TRG remained the registered owner throughout, though subject to TRG's leasehold and purchase interests. TRG as registered owner benefited directly from these improvements and, in fact, operated the RV park as a going concern after the failure of the purchase to close.

The fact that the improvements were central to both the purchase closing and the value of the security to support the vendor take-back mortgage distinguish this case from the indirect benefits described by Justice Graesser in the Royal Bank case. [ 12 ] The improvements, and the revenue stream generated by them, made the sale possible in the first place. They enhanced the security for the mortgage and, in the event that the sale did not close, provided the vendor with an improved property and a revenue stream; all of which was by design rather than by chance.

Summary Judgment [ 13 ] Kee claims the following labour, materials and expenses (again from the Applicant’s brief):

(1) Howalta = $35,313.59

(2) Drifter Installations = $29,006.25

(3) Kelly Electric $72,319.84 plus Mark-Up 12% = $80,998.22

(4) Kee Installation Labour = $62,725.00 (

i) David 460 hours = $39,100.00 (ii) Kyle 425 hours = $19,125.00 (iii) Tony 100 hours = $4,500.00

(5) Material and shop supplies = $1,384.00 [ 14 ] TRG says that no markup rate was agreed between Kee and ABR, though ABR did not object to it. There is no expert evidence, however there is evidence from Kee that the going rate is more like 20% rather than the 12% claimed. The other parties have settled and take no position. [ 15 ] TRG suggests that Kee has not provided any appraisal, or expert opinion evidence to determine the actual value of the work done or the materials furnished. They point out that some of the subs hired by Kee were non arms-length.

TRG asks for an adjournment to provide evidence to support this argument. Alternately, they argue that Kee has failed to satisfy its burden of proof. [ 16 ] This case has a number of extraordinary features, including the length of time that it took to get to this point and the nature of the claims. All of the arguments marshaled by TRG thus far have been purely technical arguments under the Act . [ 17 ] This is a

summary judgment application in a builders’ lien context. There was a notice to prove the lien early on, an affidavit in response, and cross examinations. Given the nature of this application, the context and history of this action, and the timing (roughly 10 years after the fact), my view is that the onus falls squarely upon TRG to refute the claim with some contrary evidence. It is too late for speculative arguments. It is time for closure, or for proof. Disposition [ 18 ] TRG’s application is dismissed. Kee’s application is allowed.

The parties may speak to costs. [ 19 ] I am grateful to counsel for the sharp focus put on these issues in their materials. Heard on the 24 th day of February, 2023. Dated at the City of Edmonton, Alberta this 14 th day of March, 2023. W.S. Schlosser A.J.C.K.B.A. Appearances:

Slader Oviatt Oviatt Law for TRG Developments Corp Matt A. Pruski Rackel Belzil LLP for the Kee Installations Ltd Murray Engelking Engelking Law for Allan Beach Resort

(2013) Ltd and Randy Ruggles (no appearance)