Liquid Capital Prairie Corp. Appellant (Applicant) v. Mainline Industrial Limited, 2019 SKCA 66

Court of Appeal for Saskatchewan Docket: CACV3306 Citation: Liquid Capital Prairie Corp. v Mainline Industrial Limited Partnership , 2019 SKCA 66 Date: 2019-07-26 Between: Liquid Capital Prairie Corp. Appellant (Applicant) And Mainline Industrial Limited Partnership, Commercial Sand Blasting and Painting, Spartan Scaffolding Ltd., ATCO Structures & Logistics Ltd., Thermal Systems KWC Ltd., G.T. & H.

Holdings Inc., Redriver Lumber Ltd., EMCO Corporation, The Attorney General of Canada as represented by the Minister of National Revenue, and Saskatchewan Power Corporation Respondents (Respondents) Before: Ottenbreit, Leurer and Tholl JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Leurer In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr. Justice Tholl On Appeal From: 2018 SKQB 222 , Regina Appeal Heard: June 11, 2019 Counsel: Kevin Hoy for the Appellant Jared Epp for the Respondent Leurer J.A. I.

Introduction [ 1 ] The issue in this appeal is whether a contractor can, by assignment, deprive subcontractors and suppliers from access to the holdback maintained by an owner pursuant to The Builders’ Lien Act , SS 1984-85-86, c B-7.1 [ BLA ]. [ 2 ] The appellant, Liquid Capital Prairie Corp. [Liquid Capital], asserts that the BLA should be interpreted to allow this result. A judge of the Court of Queen’s Bench disagreed: Saskatchewan Power Corporation v Mainline Industrial Limited Partnership , 2018 SKQB 222 , 84 CLR (4th) 57 [ Chambers Decision ].

Liquid Capital appeals from the Chambers Decision . [ 3 ] For the reasons that follow, I would dismiss Liquid Capital’s appeal. II. BACKGROUND A. The Dispute [ 4 ] On May 27, 2013, Liquid Capital entered into a “Full Factoring Agreement” [Factoring Agreement] with Mainline Industrial Ltd. and Mainline Industrial Limited Partnership [Mainline]. The Factoring Agreement prescribes the terms by which Liquid Capital purchases Mainline’s receivables, inclusive of “all rights of an unpaid vendor”. Pursuant to the Factoring Agreement, the parties identify the specific receivables to be factored.

Individual invoices are then purchased by Liquid Capital at a discount rate of 3.5% of their face value, and the account receivable is absolutely assigned by Mainline to Liquid Capital. The Factoring Agreement allows Liquid Capital to withhold a reserve of 25% of the face value of any purchased receivable until Liquid Capital receives payment of the receivable. The Factoring Agreement also permits Liquid Capital to deduct from the payment otherwise to be made to Mainline any amounts owing by Mainline to Liquid Capital as a result of previously assigned receivables.

The evidence discloses that over the years Mainline assigned many receivables payable to it under many different contracts. [ 5 ] In 2016, Mainline entered into a contract [SaskPower Contract] with Saskatchewan Power Corporation [SaskPower] whereby Mainline would act as general contractor in a project involving improvements to one of SaskPower’s power generating facilities. Mainline, in turn, contracted with the respondents, Commercial Sand Blasting and Painting [Commercial], Spartan Scaffolding Ltd., ATCO Structures & Logistics Ltd., Thermal Systems KWC Ltd., G.T. & H.

Holdings Inc. and Redriver Lumber Ltd. [collectively, Subcontractors], to provide services and material to allow Mainline to fulfill the obligations it owed to SaskPower under the SaskPower Contract. [ 6 ] Mainline issued six invoices [Progress Invoices] to SaskPower for work performed in relation to the SaskPower Contract. The value of the work represented by the Progress Invoices totalled approximately $4,000,000.00. Each progress invoice deducted the 10% builders’ lien holdback SaskPower was required to maintain pursuant to s. 34 of the BLA .

The total amount payable pursuant to the Progress Invoices was accordingly slightly more than $3,600,000.00, being 90% of the value of the work. The amount of the holdback, as determined by SaskPower, was $403,839.23 [Holdback]. SaskPower’s calculation of the Holdback has not been disputed by any party to these proceedings.

[ 7 ] The accounts receivable represented by each of the Progress Invoices was assigned by Mainline to Liquid Capital pursuant to the Factoring Agreement. Each of the Progress Invoices contained a certificate by Mainline that “all amounts have been paid by [Mainline] for Work which previous Certificates for Payment were issued”. This representation proved to be untrue. [ 8 ] SaskPower paid the Progress Invoices.

The remaining 10% was retained by SaskPower as a holdback, in accordance with the BLA . [ 9 ] A Certificate of Substantial Performance with respect to the SaskPower Contract was posted on the project work site on November 1, 2016. [ 10 ] On November 10, 2016, Liquid Capital received from Mainline a copy of an invoice addressed to SaskPower in the total amount of $405,231.10 [Holdback Invoice], said to represent the receivable owing to Mainline by SaskPower in respect to the Holdback. Mainline assigned the Holdback receivable to Liquid Capital in accordance with the Factoring Agreement.

By this point in time Mainline had received funding from Liquid Capital in excess of $247,277.11, over and above the cumulative value of Mainline’s total accounts receivable factored by Liquid Capital in respect to the SaskPower Contract.

The consideration provided by Liquid Capital for the assignment of the Holdback receivable was a cash payment in the amount of $145,000.00, a credit of $246,048.01 towards Mainline’s prior indebtedness, plus the 3.5% fee payable with respect to the factored invoices. [ 11 ] SaskPower’s evidence, which has not been contested by any party, is that it received only the six Progress Invoices, and “(a)t no time has Mainline asserted any claim for payment other than in the [Progress Invoices]”.

The implication of this is that the Holdback Invoice was not submitted by Mainline to SaskPower, although no argument in this Court turned on this fact. [ 12 ] On November 23, 2016, Commercial registered a claim of lien pursuant to s. 50(3) of the BLA and delivered a written notice of lien to SaskPower. By the end of January 2017, claims of lien had been registered, or written notices of lien had been delivered, on behalf of the other Subcontractors. The total value of all liens is $1,803,924.67.

This includes $370,690.87 claimed by Commercial. [ 13 ] Early in 2017, counsel for Liquid Capital wrote to SaskPower to assert Liquid Capital’s claim to the Holdback and request the payment of these funds to Liquid Capital. Recognizing the existence of other potential claims to the Holdback, the letter suggested in the alternative that “all funds be paid into Court so that the matters may be argued on their merits”.

At or around the same time, the Minister of National Revenue [Minister] asserted priority to the Holdback pursuant to the deemed trust provisions of s. 227 of the Income Tax Act , RSC 1985, c 1 (5th Supp ) [ Income Tax Act ]. [ 14 ] Faced with competing claims to the Holdback, SaskPower made application for an order permitting it to pay these monies into court in satisfaction of its contractual obligations to Mainline, in satisfaction of its obligations under the BLA to the Subcontractors and under the assignment of the holdback to Liquid Capital.

SaskPower’s application was granted by a judge of the Court of Queen’s Bench on April 6, 2017, with the result that the claims of lien and written notices of lien of each of the Subcontractors were ordered to be “discharged and vacated”, and the Holdback was paid into court.

It is common ground that the Holdback, now paid into court, stands in the place of the land that may have been subject to the liens of the Subcontractors. [ 15 ] The April 6, 2017 court order further directed that the Holdback “may be paid out of court to any interested party upon future application to and by Order from [the Court of Queen’s Bench]”.

Commercial made application to that court for an order directing that $2,000.00 be paid out to it representing the costs of its application, and the remaining $401,839.23 be paid to the Subcontractors on a pro rata basis . [ 16 ] The Minister and Liquid Capital opposed Commercial’s application, both asserting priority to the Holdback. B. Chambers Decision [ 17 ] The Chambers judge determined that Liquid Capital had priority to the Holdback monies over the claim of the Minister.

The Chambers judge relied on the authority of First Vancouver Finance v Minister of National Revenue , 2002 SCC 49 , [2002] 2 SCR 720 [ First Vancouver Finance ] to conclude that “Once the holdback receivable was factored, the Crown had no further claim to that receivable.

The holdback receivable was released from the trust and attached to the proceeds of sale” (at para 35). [ 18 ] As between Liquid Capital and the Subcontractors, the Chambers judge concluded that the assignment of the Holdback fell within the scope of s. 70(2) of the BLA which provides that no assignment by a contractor of any monies that “may be or become payable under or in respect of any contract… is valid as against any lien arising under [the BLA ]”.

The Chambers judge rejected the argument of Liquid Capital that s. 70(2) should not extend to absolute assignments where the assignee had no remaining interest in the receivable. The Chambers judge also concluded that the Holdback was subject to the trust constituted by s. 7 of the BLA for the benefit of the Subcontractors.

From this the Chambers judge drew the further conclusion that the Subcontractors also had priority over Liquid Capital pursuant to s. 15 of the BLA . [ 19 ] On these bases, the Chambers judge granted Commercial’s application and directed that $2,000.00 be paid out to Commercial representing the costs of its application, and the remaining $401,839.23 be paid to the Subcontractors on a pro rata basis. The Chambers judge also granted Commercial “two sets of costs on column 2 of the Tariff” (at para 60) against the Minister and Liquid Capital. C.

Parties’ positions in this Appeal [ 20 ] The Minister has not appealed the determination that he has no priority claim to the Holdback. The Minister also took no position in respect to Liquid Capital’s appeal and did not appear in this Court. [ 21 ] Liquid Capital takes the position that the Chambers judge erred in granting the Subcontractors priority to the Holdback. Liquid Capital says that it took an absolute assignment of this receivable, for which it has made payment in full in accordance with the Factoring Agreement. Liquid Capital argues that the Chambers judge erred in his

interpretation of s. 70(2) and s. 15 of the BLA . More specifically,

Liquid Capital asserts that the terms “assignment” and “all general and special assignments”, as found in s. 70(2) and s. 15 respectively,“cannot be interpreted to include absolute assignments, which are fundamentally distinct in character from other classes of assignments”.Liquid Capital asks that this Court “should find that it is entitled to payment of the $403,839.23 held by the Court of Queen’s Bench,together with costs assessed as against the Respondents participating in these proceedings”. [22] Commercial, speaking with the support of the other Subcontractors, takes the position that the Chambers Decision is correct.Commercial asks that Liquid Capital’s appeal be dismissed with costs in this Court in its favour on the basis of Column 4.

III. ISSUE [23] The sole issue in this appeal is whether the assignment by Mainline to Liquid Capital of the Holdback defeats the claim theSubcontractors otherwise have to the Holdback. IV. ANALYSIS [24] Both parties focused their arguments on s. 70(2) of the BLA, which states as follows:

(2) No assignment by a contractor or subcontractor of any moneys that may be or become payable under or in respect of any contract orsubcontract to which this Act applies is valid as against any lien arising under this Act. [25] Liquid Capital invites this Court to closely scrutinize s. 70(2) and read it in a way that excludes “absolute assignments” from itsscope. The dispute between the parties therefore reduces to the appropriate

interpretation of s. 70(2). [26] The proper approach to any issue of statutory

interpretation is the so-called modern principle articulated in Rizzo & Rizzo ShoesLtd., Re, (SCC), [1998] 1 SCR 27 (SCC). The words of the BLA “are to be read in their entire context and in theirgrammatical and ordinary sense harmoniously with the scheme of the Act and the intention of the Legislature”: Prestige CommercialInteriors

(1992) Ltd. v Suderman, 2018 SKCA 95 at para 5, 431 DLR (4th) 216 [Prestige Commercial]. In Axcess Capital Partners Inc. vAllsteel Builders

(2) Ltd., 2015 SKCA 33, 383 DLR (4th) 334 [Axcess Capital], Jackson J.A. further explained and applied the modernprinciple in a builders’ lien context: [56] There are three dimensions of the Modern Principle: (

i) textual meaning; (ii) legislative intent, which encompasses the scheme andobject of the statute and Parliament’s intention; and (iii) “compliance with established legislative norms,” which are part of the wholecontext in which the statute’s words are to be read and part of the legislature’s intention (Sullivan, p. 8 at para. 2.5).

For example, rulesregarding textual analysis assist in the determination of the meaning of the text, the rules regarding extrinsic aids help interpreters identifywhat they may look at for determining legislative intent, and strict and liberal construction and presumptions of legislative intentcontribute to determining the purpose of the statute and to evaluating whether an outcome is acceptable (Sullivan p. 10 at para. 2.8). [27] I approach the question of

interpretation in this case in the same way. [28] Read in its grammatical and ordinary sense, s. 70(2) determines the outcome of this case. Section 70(2) sets out threepreconditions to its application, all of which on the face of it are met here: (

i) the Holdback is payable under or in respect to a contract towhich the BLA applies; (ii) the Subcontractors had a lien which is a charge on the Holdback (s. 33) and also on the project land, althoughthe Holdback monies paid into court now stand in place of the land (s. 57); and (iii) Liquid Capital’s claim is based on an assignment ofthe Holdback (indeed Liquid Capital repeatedly emphasizes the absolute nature of the assignment). Given these facts, if the words used ins. 70(2) are given their ordinary meaning, the provision would apply.

A plain reading of s. 70(2) leads to the conclusion that theassignment made by Mainline to Liquid Capital is not “valid as against any lien arising under [the BLA]”. [29] The question becomes whether there is something in the scheme and object of the BLA, or the application of establishedlegislative norms, that should cause this Court to deviate from giving s. 70(2) this ordinary meaning. I turn first to the overall objects ofthe statute. [30] Construction lien legislation exists because the common law does not adequately protect those who provide services andmaterial on credit to construction projects.

Justice Jackson summarized the purposes of the BLA in this way in Axcess Capital: [58] With respect to purpose, the statute has two concerns: (

i) the protection of those who provide services and materials on credit, and (ii)the protection of the commercial interests of others, including the owner and the financier of the improvement. This Court has, however,consistently emphasized that “the principal object of this Act is to better ensure that those who contribute work and material to theimprovement of real estate are paid for doing so” (see Hansen v. Canadian National Railway (1983), (SK CA), 22Sask. R. 126 (Sask. C.A.) at para 30). [31] The same essential points have been emphasized repeatedly in the judgments of this Court.

I refer, by way of example only, toPCL Industrial Management Inc. v Agrium, 2015 SKCA 55 at paras 26–28, 457 Sask R 298 [PCL Industrial] and Grey Owl EngineeringLtd. v Propak Systems Ltd., 2015 SKCA 108 at paras 26–32, 467 Sask R 160.

It is therefore consonant with the “primary purpose” of theBLA (i.e., the protection of the Subcontractors who have provided services and materials on credit), if the words used in s. 70(2) are giventheir ordinary meaning. [32] Before turning to the secondary purpose of the BLA (i.e., the protection of the commercial interests of others, including theowner and the financier of the improvement), it is helpful to consider some of the features of the statutory scheme created by thelegislation.

The accommodation of the two broad purposes of the legislation gives rise to what at times is an undoubtedly complexstatutory regime. However, this appeal concerns two straightforward aspects of the BLA, that is the creation of lien rights in favour of thesuppliers of services and materials on credit, and the requirement under that statute that the owner maintain a holdback from moniesotherwise payable on a construction contract for the benefit of those who provide services or materials to an improvement. I intend to

examine Liquid Capital’s proposed

interpretation of s. 70(2) in the context of these two features of the BLA. [33] The BLA creates in rem rights. Pursuant to the BLA, a person who participates in a construction project has a lien which “arisesand takes effect when he first provides his services or materials to the improvement” (s. 27). Because the Holdback monies have been paidinto court, to the extent that the Subcontractors’ liens formed a charge against SaskPower’s land, the lien now charges those monies incourt (s. 57). The lien is also “a charge on the holdback required to be retained by

section 34 and… any additional amount owed inrelation to the improvement by a payer…” (s. 33). [34] The obligation of a payer on a construction contract to maintain a holdback arises pursuant to s. 34(1) of the BLA, whichprovides as follows: 34(1) Each payer on a contract or subcontract under which a lien may arise under this Act shall retain a holdback equal to 10% of thegreater of: (

a) the value of the services or materials as they are actually provided under the contract or subcontract; or (

b) the amount of any payment made on account of the contract or subcontract price. [35] The BLA has various mechanisms to ensure that the holdback is constituted and maintained.

Section 37 imposes personalliability on an owner to lien claimants “to the extent of that portion of the holdback to which that lien claimant is entitled”. Subject toexceptions, every owner is obligated to establish a holdback trust account (s. 38). It is impermissible for the holdback to be applied toremedy defaults by a contractor or subcontractor (s. 35). Finally, the BLA contains a detailed system as to how a holdback may bereleased.

Where, as here, a contract has been certified to be substantially performed, the holdback may be released forty clear days afterthe certificate has been given, unless (importantly) a claim of lien has been registered (s. 43). These and other features of the BLA serve toensure that subcontractors “may be assured that, regardless of the fact that monies are being paid throughout the contract and subcontractin the ordinary course of the project, there will still be a holdback fund available to at least partially satisfy their lien claims”: W. BrentGough and Collin K.

Hirschfeld, Saskatchewan Builders’ Lien Manual, 2nd ed (Regina: Law Society of Saskatchewan Library, 2014) at57. [36] It is in complete keeping with the specifics of the lien and holdback features of the BLA’s statutory scheme to interpret s. 70(2)as encompassing absolute assignments of holdback monies. In oral argument, Liquid Capital could point to no legal distinction betweenthe assignment it took pursuant to the Factoring Agreement and any other absolute assignment of a holdback that a contractor might give.My conclusion is that if the

interpretation urged by Liquid Capital was to be adopted it would undermine, if not completely neuter, theprotection intended to be provided by the holdback requirement. [37] Still, Liquid Capital argues that there is good commercial purpose served if s. 70(2) is restricted to not include absoluteassignments. It argues that if its assignment is defeated by the Subcontractors it will have a “chilling effect” on commercial factoring inthe construction industry “thereby restricting contractors, subcontractors, and suppliers from access to a form of financing that wouldotherwise be available to them”.

Liquid Capital points to the secondary purpose for the BLA, that is to serve the commercial interests ofowners and financiers, as justifying the assignment of holdback receivables. It also argues that it is fair that an assignee’s rights berecognized, since a contractor which assigns holdback monies receives consideration from the assignee. [38] I observe that there is no evidence before the Court with respect to the chilling effect Liquid Capital describes.

Additionally, thecase law recognizes that to the extent that the BLA is concerned with the commercial interests of owners and others, the focus is on thecreation of a statutory scheme that will give confidence to subcontractors and suppliers to supply services and material on credit andprovide certainty to owners and others to allow for the orderly flow of money in respect of construction projects. The mutuality of theseconcerns was discussed by Cameron J.A. in Town-N-Country Plumbing & Heating

(1985) Ltd. v Schmidt (1991), (SKCA), 93 Sask R 278 (CA) [Town-N-Country]: [26] The statute is primarily concerned with the commercial interests of persons who, under contract and on credit, contribute service ormaterial to the improvement of real property, whether under contract to the owner, to the contractor engaged by the owner, or to anysubcontractor. According to the law of contract, such persons have no recourse against the property should they go unpaid, and norecourse against anyone except the party with whom they have contracted.

Limited as they are in those ways, the rights and remediesafforded by contract law were seen by the legislature as inadequate in this context, and so, an elaborate scheme of supplementary rightsand remedies was enacted, all with the purpose of better enabling such persons to recover the amounts owing to them.

This is the primarypurpose of the Act, and to the end of achieving that purpose, trusts were constituted in relation to amounts payable in connection with theimprovement; liens and charges of various kinds were created; holdbacks and retentions of moneys payable were provided for, and so on. [27] This, however, is not the only concern or purpose of the Act. It is also concerned with the commercial interests of others, includingthe owner and the financier, if any, of the improvement.

In their interests, as well as in the interests of the contractor and thesubcontractors, extensive provision was made allowing for moneys to flow down the contractual chain without risk of liability to thoseproviding the materials or services. The purpose of these provisions — and hence the secondary purpose of the Act — is to ensurebusiness efficacy. (Emphasis added) [39] This statement has been reiterated in judgments of this Court.

See, for example: BWV Investments Ltd. v Saskferco ProductsInc. (1994), (SK CA), 125 Sask R. 286 (QL) (CA) at para 30; PCL Industrial, at paras 26–28, Axcess Capital, at para59; and Prestige Commercial, at para 13. [40] Respectfully, as I see it, Liquid Capital’s proposed

interpretation of s. 70(2) is contrary to even the secondary purpose of theBLA to protect the interests of others such as owners and financiers. Rather than promoting the flow of monies down the constructionchain, as the facts of this case illustrate, allowing the assignment of holdback monies would result in money leaking from the constructionpyramid. Rather than ensuring business efficacy, allowing assignments to defeat subcontractors’ and material suppliers’ claims to

holdback monies would seriously undermine the security they expect to have, tending to make them less willing to provide services and material on credit. In the result, not only would the “primary purpose” of the BLA be frustrated, but Liquid Capital’s proposed

interpretation would undermine the commercial interest of owners and others that the statute is intended to advance. [ 41 ] Finally, I observe that s. 70(2) does not prevent the assignment by a contractor of its accounts receivable; it states simply that such assignment is not effective against lien claimants. It remains open to a factor to purchase the account receivable. It is simply incumbent on the assignee to be aware that, if taking an assignment, the account receivable may be subject to the overarching rights of lien claimants. [ 42 ] In

summary, on its face, s. 70(2) of the BLA renders ineffective against lien claimants any assignment of monies that may be or become payable under or in respect to any contract or subcontract to which the BLA applies. Nothing on the face of s. 70(2) invites the introduction of any qualifier or limitation to the word “assignment” as used in the section. The

interpretation of s. 70(2) favoured by Liquid Capital would frustrate, rather than promote, the legislative purposes which led to the enactment of the BLA and also run counter to the specific statutory regime designed to achieve those objectives. Therefore, all dimensions of the modern principle of statutory

interpretation point to the conclusion that s. 70(2) is properly understood to encompass absolute assignments. [ 43 ] I will now deal with several final arguments made by Liquid Capital. [ 44 ] Liquid Capital suggests that notwithstanding any logic that might exist in support of the above

interpretation of s. 70(2), First Vancouver Finance compels a conclusion that its assignment must defeat the claims of the Subcontractors. In First Vancouver Finance , the Supreme Court of Canada held that the deemed trust provisions found in s. 227 of the Income Tax Act could not be raised by the Minister to defeat the interest of a person who took an absolute assignment of a tax debtor’s accounts receivable. [ 45 ] Central to the Court’s reasoning in First Vancouver Finance was the nature of the deemed trust itself.

The Supreme Court held that the deemed trust did not attach specifically to particular property and instead operated in a fashion that was not restrictive of the ability of the tax debtor to carry on its business: [40] In my view, the scheme envisioned by Parliament in enacting ss. 227(4) and 227(4.1) is that the deemed trust is in principle similar to a floating charge over all the assets of the tax debtor in the amount of the default. As noted above, the trust has priority from the time the source deductions are made, and remains in existence as long as the default continues.

However, the trust does not attach specifically to any particular assets of the tax debtor so as to prevent their sale. As such, the debtor is free to alienate its property in the ordinary course, in which case the trust property is replaced by the proceeds of sale of such property. (Emphasis added) [ 46 ] The regime contemplated in the BLA stands in contrast to that described in First Vancouver Finance in two key ways.

First, in contrast to the deemed trust created by s. 227 of the Income Tax Act , the lien under the BLA attaches specifically to a particular asset— indeed the very asset at issue in this appeal—that is to say the Holdback monies. Second, the Income Tax Act contains no provision similar to s. 70(2) preventing the tax debtor from alienating the property subject to the deemed trust. [ 47 ] Liquid Capital accurately points out that in Town-N-Country Cameron J.A. stated that a builder’s lien “emerges as a floating charge” (at para 33).

The suggestion is that this brings the Subcontractors’ lien claims into line with the entitlements of the Minister under the Income Tax Act . However, the passage relied on by Liquid Capital must be read in the full context of what Cameron J.A. said in Town- N-Country : [33] The lien emerges when the subcontractor first supplies the service or material contracted for (s. 27). It is multi-faceted and emerges as a floating charge (a) “on the estate or interest of the owner of the land occupied by the improvement”, in the language of s. 22; (b) “on the holdback required to be retained by

section 34 ”, in the words of s. 33; and (c) “upon any additional amount owed in relation to the improvement”, in the words again of s. 33.

And to begin with, the lien extends in amount to “as much of the price of the services or materials as remains owing” by the contractor to the subcontractor (s. 22). [ 48 ] Nothing in Cameron J.A.’s remarks suggests that a lien does not, as stated in s. 27 of the BLA , arise and take effect when the subcontractor or supplier provides its services or materials to the improvement, nor does it suggest in any way that the lien does not charge the holdback. [ 49 ] Liquid Capital observes that in Van T Holdings Inc. v KCS Equipment Ltd. , 2013 ABQB 154 , 558 AR 392 [ Van T ], Michalyshyn J. applied First Vancouver Finance to resolve a dispute under the Builders’ Lien Act , RSA 2000, c B-7 , in favour of a factor against lien claimants.

Van T did not involve a dispute in respect to holdback monies. More broadly, the construction lien regime established by Alberta’s Builders’ Lien Act is in many fundamental respects different than the BLA . I offer no comment on the correctness of the decision in Van T because it was decided in the context of Alberta’s Builders’ Lien Act . It is enough for me to say that I do not find the reasoning in Van T to be apposite in the context of this province’s BLA . [ 50 ] I have analyzed Liquid Capital’s argument solely with reference to s. 70(2) of the BLA and on the basis that this dispute involves holdback monies.

The Chambers judge also justified his conclusion with reference to s. 15 of the BLA which provides as follows: 15 In addition to any other priority which a beneficiary of a trust constituted by this Part may have at law, a beneficiary has priority over all general or special assignments, security interests, judgments, seizures, attachments, garnishments and receiving orders, whenever received, granted, issued or made, of or in respect of the contract or subcontract price or any portion of the contract or subcontract price. [ 51 ]

Section 15 is found within of

Part II of the BLA , which deals specifically with the trust provisions of that statute. While holdback monies are subject to the trust provisions of the BLA , reference to s. 70(2) provides a sufficient answer to the question raised in Liquid Capital’s appeal on the facts of this case. I would leave for another day the application of s. 70(2) in the context of non-holdback monies, as well as the proper

interpretation of s. 15 in a context where it is important to the outcome of the case.

V. CONCLUSION [ 52 ] Because of s. 70(2) of the BLA , the assignment of the Holdback given by Mainline and taken by Liquid Capital is invalid as against the liens of the Subcontractors. The Subcontractors are entitled to the Holdback. [ 53 ] I would therefore dismiss Liquid Capital’s appeal. Considering the broader interests Commercial was representing in this appeal, I would award to it costs in this Court against Liquid Capital on the basis of Column 4. “Leurer J.A.” Leurer J.A. I concur. “Tholl J.A.” Per Ottenbreit J.A. I concur. “Tholl J.A.” Tholl J.A.