2023 MBKB 119, 2023 MBKB 119

Date: 20230804 Docket: CI 23-01-39300 (Winnipeg Centre) Indexed as: Opaskwayak Cree Nation v. Razar Contracting Services Ltd. et al. Cited as: 2023 MBKB 119 COURT OF KING’S BENCH OF MANITOBA B E T W E E N: OPASKWAYAK CREE NATION, applicant, ) EVAN EDWARDS and ) KAISHA THOMPSON ) for the applicant ) - and - ) PETER HALAMANDARIS and ) CAITLIN DYCK ) for Razar Contracting Services Inc. ) ) TIM FRY and ) ROBERT WALICHNOWSKI ) for Long Beach Construction ) ) MATHIEU LAFRENIERE ) for Accurate HD Ltd. )

RAZAR CONTRACTING SERVICES LTD., LONG BEACH CONSTRUCTION INC., ACCURATE HD LTD., SOLID SILVER CONSTRUCTION LTD., WEARING WILLIAMS LIMITED, BESTWAY FENCE SYSTEMS INC., DELCO AUTOMATION INC., AIR MOVEMENT SERVICES LTD. and SONEPAR CANADA INC., operating as GESCAN, A SONEPAR COMPANY, respondents. ) DEREK OLSON and ) DALE BEYNON ) for Solid Silver Construction Ltd. ) ) CHARLES ROY ) for Delco Automation Inc. ) ) GREG FLEETWOOD and ) KELSEY SCHADE ) for Kako Investments Ltd. (assignee ) of Wearing Williams Limited) ) ) SIMON GARFINKEL ) for Bestway Fence Systems Inc. ) ) JUDGMENT DELIVERED: ) August 4, 2023 TURNER J.

I. INTRODUCTION [ 1 ] In this application, Opaskwayak Cree Nation (“Opaskwayak”) seeks an interpleader order to pay funds into court (the “funds”). Opaskwayak is currently holding over $1.2 million in accordance with various provisions of the contract it had with Razar Contracting Services Ltd. (“Razar”). Opaskwayak wants to remove itself from ongoing litigation between Razar, the general contractor, and the other respondents (the “subcontractors”) to this application.

The subcontractors claim that Razar has not paid them for their work. [ 2 ] Although the total amount of the funds is more than the principal amount claimed by the subcontractors against Razar, the subcontractors say that the additional funds should also be paid into court to cover potential interest and costs awards. [ 3 ] Razar takes the position that only the portion of the funds to cover the principal amount of the subcontractors’ claims should be paid into court and that the balance should be paid directly to Razar. II.

BACKGROUND [1] Opaskwayak hired Razar as the general contractor for a project to upgrade the water treatment plant on reserve lands. As a result, the two entered into a lengthy and detailed contract (the “contract”). [2] The remaining respondents on this application were hired as sub-contractors [1] or sub-sub-contractors [2] to complete various aspects of the project. [3] In order for Razar to receive progress payments or for holdbacks to be released, the contract required Razar to provide Opaskwayak with Statutory Declarations, confirming the sub-contractors had been paid.

The contract provided that the Statutory Declarations “shall contain a deposition by [Razar] … that all lawful obligations of [Razar] to Subcontractors and suppliers of material in respect of the work under the contract have been fully discharged.” [ 4 ] Razar provided Opaskwayak 16 Statutory Declarations between March 25, 2020, and March 3, 2022, declaring that the subcontractors were paid.

However, eight companies came forward to Opaskayak to advise that they had not been paid: SUBCONTRACTOR AMOUNT NOTICE DATE Bestway Fence Systems Inc. $20,401.50 September 28, 2021 Accurate HD Ltd. $625,590.04 October 1, 2021 Solid Silver Construction Ltd. $154,691.86 December 23, 2021 and February 11, 2022

Long Beach Construction Inc. (Gescan’s claim of $88,956.05 is subsumed in Long Beach’s claim) $226,353.50 January 10, 2022 Air Movement Services Ltd. [3] $3,675.00 February 11, 2022 Wearing Williams Limited [4] $32,243.49 March 14, 2022 Delco Automation Inc. $51,461.55 September 14, 2022 Total $1,118,092.00 $1,114,417.00 [ 5 ] Razar does not take issue with the amounts of the subcontractor’s claims for work completed under the contract being paid into court. It disputes the excess funds (the “delta”) of approximately $170,000 being paid into court.

It argues that, at this point in time, the subcontractors do not have a claim to the delta funds. III. ISSUES 1. What amount of funds should be paid into court? 2. Razar has come to a settlement with Bestway Fence Systems Inc. (“Bestway”) and Kako Investments Ltd. (“Kako”). Should they be paid from the interpleader amount deposited with the court or should they have to wait until all claims are resolved (by settlement or by judgment)? 3. Should Opaskwayak be paid costs on this application? In what amount? Who should pay the costs? a. Should any of the subcontractors be awarded costs at this point in proceedings?

IV. ANALYSIS A. What amount of funds should be paid into court? [4] Interpleader orders are governed by Rule 43 of the Manitoba Court of King’s Bench Rules . An interpleader order is a discretionary order. [ 6 ] A thorough review of the law related to interpleader applications is not required here because all of the parties agree that at least some of the funds should be paid into court. The question is, how much?

Suffice it to say, an interpleader order is available in the circumstances of this case because Opaskwayak is in possession of property (the funds) that is subject to competing claims by others (Razar and the subcontractors). Opaskwayak does not claim a beneficial interest in the funds and is willing to deposit the funds with the court. [ 7 ] Opaskwayak does not take a position on whether the whole amount of funds or only a portion of the funds should be paid into court. [ 8 ] Razar says that the applicant should not be permitted to deposit the delta amount into court.

It says that interpleader is only available where the competing claims are to the specific property or funds sought to be interpleaded. Interpleader is not available to obtain security for future interest or cost amounts that may be payable upon disposition of the claims. It says that Opaskwayak should pay the delta directly to Razar and the balance should be paid into court. [ 9 ] Although counsel for each subcontractor made slightly different submissions, as a whole the subcontractors argue that the whole amount of the funds should be paid into court.

Claims for Interest [ 10 ] The subcontractors say that I must consider the entire claims they are making, including interest on overdue invoices not paid by Razar. [ 11 ] It is not for me, on this application, to conduct an extensive analysis of the subcontractors’ claims. I must only be satisfied that the competing claims to the funds are not frivolous. See Shawano Consulting Services Ltd. et al. v. Penn-Co Construction Canada

(2003) Ltd. et al. , 2022 MBQB 134 , at para. 14 (“ Shawano ”) . [ 12 ] Given the evidence before me, I am satisfied that the claims are not frivolous, including their claims for interest on the overdue amounts. [ 13 ] In Great Northern Insulation Services Ltd. v. King Road Paving and Landscaping Inc. , 2021 ONCA 367 , (“ Great Northern ”) the Ontario Court of Appeal held (at para. 16): In the normal commercial context, interest that accrues on payments due under a contract would be considered amounts owing on the contract.

Interest on overdue amounts may be expressly included in the terms of the contract or it may be implied such as, for example, where the interest provision is included in the invoices that are rendered under the contract. This

interpretation is consistent with the definition of “price” contained in s. 1(1) of the Construction Lien Act which reads, in part:

“price” means the contract or subcontract price, (

a) agreed upon between the parties [emphasis added] [ 14 ] I will briefly comment on each of the subcontractors’ claims. Kako’s Claim [ 15 ] Between November 18, 2020, and April 29, 2021, three invoices were provided to Razar, totaling $32,243.49, and they were not paid. Each of those invoices included the statement, “Interest at 2% per month 24% per annum WILL BE CHARGED On Overdue Accounts”. [ 16 ] Kako filed a Statement of Claim against Razar as a result of the non-payment of the invoices and was granted Default Judgment on February 27, 2023, for a total $90,418.16, including costs.

That judgment bears interest at 24% per year since the date of judgment. To date, that judgment has not been paid. Solid Silver’s Claim [ 17 ] Solid Silver Construction Ltd. ( “ Solid Silver”) submits that it provided eight invoices, totaling $687,354.34, to Razar. Razar made payments of $532,662.48, leaving $154,691.86 unpaid. Each of those invoices included the statement, “Please make payments within 30 days to avoid interest charges.

Fees are calculated at 2% per month once overdue.” Long Beach Construction’s Claim [ 18 ] Long Beach Construction Inc. (“Long Beach”) submits that four invoices provided to Razar, totaling $107,078.05, remain unpaid. In addition, it claims that Razar has not paid a holdback amount of $119,275.45. Long Beach therefore claims that it is owed $226,353.50, plus interest. In addition, Long Beach also intends to claim damages against Razar for breach of its contractual duty of good faith, alleging that Razar provided false information to Long Beach regarding deficiencies in work performed.

Bestway’s Claim [ 19 ] Bestway submits that its one invoice to Razar for $20,401.50, provided on September 28, 2021, remains unpaid. The invoice included the statement, “The amount becomes past due if not paid by the end of that month, and further, that a 2% service charge (24% per annum) will be added on any past due portion with a minimum monthly charge of $1.00.” Accurate HD’s Claim [ 20 ] Accurate HD Ltd. (“Accurate HD”) did not provide evidence of the specific details of its claim for unpaid amounts, except that it has commenced an action against Razar claiming $625,590.04, plus interest and costs.

In his affidavit on behalf of Accurate HD, Kyle Bacon affirmed that the interest on its claim exceeds the delta. I note that Mr. Bacon was not cross-examined on his affidavit to dispute that assertion. The Builders’ Liens Act [ 21 ] The Builders’ Liens Act , C.C.S.M. c. B91 , provides protection to contractors who make improvements to property. In Great Northern , supra , dealing with similar legislation in Ontario, the Court noted that such remedial legislation should be given “a fair, large and liberal

interpretation in order to achieve its objectives. … Principal among those objectives is the protection of those lower down on the ‘pyramid’ of claimants” (at para. 14). [ 22 ] The subcontractors say that the whole amount of the funds, including the delta, constitutes trust funds pursuant to The Builders’ Liens Act and therefore are imposed with trust obligations. To pay the delta directly to Razar would put those funds at risk and be a breach of the trust obligations.

Opaskwayak cannot pay out the delta unless the trust obligations have been satisfied. [ 23 ] I agree that the full amount of funds that Opaskwayak seeks to pay into court constitute trust funds for the benefit of Razar and the subcontractors. [ 24 ] The trust provisions of The Builders’ Liens Act include: Receipts and moneys of owner constitute trust fund 5(1) Where, under a contract, sums become payable to the contractor by the owner on the basis of a certificate of a payment certifier, any amount, up to the aggregate of the sums so certified, that is in the hands of the owner or received by him at any time thereafter for payment under the contract constitutes, until paid to the contractor, a trust fund for the benefit of (

a) the contractor and all sub-contractors and other persons who have supplied materials or provided services for the purposes of

performing the contract or any sub-contract under the contract; …. Duties of owner as to trust fund 5(3) The owner is the trustee of the trust funds created under subsections (1) and (2) and he shall not appropriate or convert any part of the trust fund to or for his own use or to or for any use not authorized by the trust until (

a) the contractor has been paid all sums justly owed to him in respect of the performance of the contract; and (

b) provision for the payment of other affected beneficiaries of the trust has been made. [ 25 ] Section 5(3)(

b) provides that Opaskwayak cannot make any use of the funds until the beneficiaries of the trust, which would include the subcontractors, have been paid. The evidence provided by the subcontractors demonstrates that amounts are still owing to them with interest accruing. Therefore, until the subcontractors are paid, a payment of the delta to Razar would be in contravention of s. 5(3). [ 26 ] Opaskwayak is in a similar position as Bloodvein First Nation in Shawano , supra , where Perlmutter, ACJ noted (at para. 24): … [A]s trustee of the funds, Bloodvein faces “an actual dilemma as to how [it] should act”….

Bloodvein does not deny it owes the funds for completion of the project. However, if Bloodvein discharges its obligations to [the contractor], it exposes itself to suit from [the subcontractor] for violating Bloodvein’s obligations under ss. 5(1) and 5(3) of the Act . In light of ss. 5(1) and 5(3) of the Act , in the context of my finding that the competing claims are not frivolous, these claims are irreconcilable. Conclusion [ 27 ] The payment into court of the full amount of the funds allows the subcontractors and Razar to present their cases for a final determination.

That determination may include interest and other payments owed to the subcontractors. The validity of the subcontractors’ claims is not for me to decide at this point, other than to conclude that they are not frivolous. [ 28 ] Opaskwayak will pay the full amount of the funds into court. Once that payment is made, Opaskwayak’s liability in respect to the funds will be extinguished. B. Settlement with Bestway and Kako [ 29 ] At the hearing of this application, I was advised that Bestway and Kako had come to a resolution of their claims with Razar.

As such, those three parties wish to finalize their settlement and have the funds paid out of the interpleader amount. [ 30 ] Opaskwayak takes no position on this issue. [ 31 ] Some of the other subcontractors submitted that Bestway and Kako should have to wait until all of the other claims against Razar on this project are resolved (either by settlement or judgment). Other subcontractors did not take a position. [ 32 ] As a basic principle, the court always encourages settlement of claims.

Often the main goal of everyone involved is for the parties to come to a mutually-agreeable settlement rather than have a disposition imposed upon them by the court. [ 33 ] I see no reason why Bestway, Kako and Razar should be prevented from finalizing the settlements they have reached. In construction projects, it is often the case that one or some subcontractors are paid before others as the work project progresses. In addition, it only makes sense that the amounts to be paid to Bestway and Kako come from the interpleader amounts.

There is no reason why they should have to wait until all of the other claims are resolved and I was provided with no authority suggesting that is the required path. C. Costs [ 34 ] Costs are always discretionary and to be determined in the particular circumstances of a matter. [ 35 ] Opaskwayak submits that it is an innocent party in these circumstances and should not be penalized for Razar’s apparent failure to pay its subcontractors. It says that it is entitled to costs, on a solicitor-client basis.

Opaskwayak does not take a position on whether the costs should be paid out of the delta or be paid by Razar. [ 36 ] The subcontractors do not dispute that Opaskwayak should be paid costs, however, take the position that Razar should have consented to payment into court of the funds rather than complicate matters which required Opaskwayak and the subcontractors to take additional steps. They say that Opaskwayak’s costs, in whatever amount I determine, should be paid by Razar. In addition, the subcontractors say that Razar should pay their costs on this application for the same reason.

Opaskwayak’s Costs [ 37 ] It is unfortunate that an agreement was not reached regarding what should be done with the funds held by Opaskwayak and that they had to bring this application. While I do not agree with Razar that the delta should be paid directly to them, I cannot say that the issue was so obvious that it was frivolous to oppose Opaskwayak’s application. [ 38 ] I agree that Opaskwayak is entitled to costs payable by Razar, however, I conclude that, in the circumstances, tariff costs are

appropriate. The Subcontractors’ Costs [ 39 ] It is clear that the subcontractors will continue to pursue the claims against Razar. As such, I think it most appropriate to leave the issue of costs to the subcontractors to be determined when those claims are ultimately determined. As such, I am not making an order of costs to be paid to the subcontractors at this point. CONCLUSIONS [ 40 ] I am granting the interpleader order directing Opaskwayak to pay the full amount of the funds into court.

Upon payment into court, Opaskwayak’s liability in respect to the funds is extinguished. [ 41 ] I am not making any order that prevents Bestway, Kako and Razar from reaching settlements. The amounts of those settlements should properly be paid from the amount being paid into court. [ 42 ] I am ordering that Razar pay Opaskwayak costs in accordance with the tariff. I am not ordering that costs to the subcontractors be paid at this point. ____________________________ J.