Fatal Errors: The small mistakes that can have a big impact on your lien claim

AUTHORED BY: Matthew Turzansky and Ryan Krushelnitzky

The scenario is a fairly common one: a contractor doesn’t get paid, and then proceeds to register a lien on a project, only to later discover a mistake in the Statement of Lien. It could be a typo in the name of the Owner; or it could be a failure to properly identify the interest being liened. While such errors may seem small, they could put the entire lien claim in jeopardy.

This scenario was addressed recently by the Court of Queen’s Bench in Encore Electric Inc. v Haves Holdings, 2017 ABQB 803. In that case, an electrical contractor was hired to perform certain electrical work in a Defendant tenant’s leased space. When a dispute arose about alleged deficiencies, the Contractor registered two liens valued at approximately $686,000.

When the liens were registered, the box for identifying the interest in the land was left blank. This resulted in the lien being registered against the property owner’s fee simple interest, rather than the Defendant tenant’s leasehold interest. In light of this, the Defendant applied to have the liens struck on the basis that they were not registered against the correct interest in the lands.

In response, the Contractor argued that the landlord’s interest could be liened (notwithstanding that the Contractor was hired by the Defendant tenant), since the landlord fell within the definition of “owner” under the Builders Lien Act. The Court rejected this argument. The Court relied upon the line of cases to the effect that the owner’s interest will not be lienable where work is performed for a tenant unless the owner becomes significantly involved in the design and/or construction, or where the landlord obtains a “direct benefit” from the work.

The Contractor also argued the error on the face of the lien could be cured by the Court. Section 37 of the Builders Lien Act allows a flawed lien to survive where there is “substantial compliance” and nobody is prejudiced by the failure. The Contractor argued that this was a situation where no prejudice was suffered as a result of the mistake, as the Defendant tenant had knowledge of the lien claim. Further it was argued that no party would have done anything differently had the proper interest been named.

Master Prowse considered his earlier decision in Norson Construction Ltd. v Clear Skies Heating & Air Conditioning Ltd., 2017 ABQB 188.  That was a case where the lienholder’s error was found to be curable. The Master distinguished between the type of mistake in the Norson and the mistake made by the Contractor in this case:

  1. In Norson, the lienholder correctly identified the interest being liened (fee simple), but simply identified the wrong company as owner;
  2. In the current case, it wasn’t simply a typo in the name; rather the Contractor registered a lien against an interest that was not properly lienable to begin with.

The difference between the two types of mistake makes all the difference. While a mistake in the name of the owner of the land may be cured, a failure to lien the correct interest cannot (on the basis there is no substantial compliance). Citing a string of authorities all pointing to the same outcome, Master Prowse found he had no choice but to strike out the Plaintiff’s lien. Master Prowse expressed sympathy for the Plaintiff’s arguments, but held that he was handcuffed by the binding authorities until a Queen’s Bench judge decided otherwise.

How does this decision affect you? A small mistake in your Statement of Lien may have big consequences. Until the Court decides to re-examine the established case law, an error in identifying the interest to be liened will continue to be a fatal one. The best way to ensure that your lien claim is not lost by such an error is to seek legal advice before the lien is registered. For advice and assistance in the registration of liens, contact Matthew Turzansky or Ryan Krushelnitzky at Field Law.

Termination Problems: when can you walk away from a contract?

AUTHORED BY: Leah McDaniel and Ryan Krushelnitzky

Construction projects don’t always go as planned. Delays, add-ons, and changes to plans are common. Parties can sue when losses occur. When this happens, the contract itself is the key guide to the parties’ obligations.

However, sometimes things go very wrong. There are times when matters go so far sideways that one of the  parties wants to bring the contract to an early end.  For example, by taking the position that the other side has “repudiated” the agreement and treating the contract as if it is at an end.

An Example – Fundamental Breach & Repudiation in the Construction Context

The Alberta Court of Queen’s Bench applied the principles of repudiation in the construction context in the recent decision of RPM Investment Corp v Lange, 2017 ABQB 305.  This was a case involving a construction agreement for a new home.

While the relationship between the Owners and Contractor started off smoothly, frustrations soon developed. Among other things, the Contractor accused the Owners of seriously delaying making design decisions, resulting in construction difficulties. The Owners complained that the Contractor wasn’t doing the work based on their specifications.

Matters came to a head when the Owners sent an email to the Contractor stating that they were “giving notice of our intent to terminate effective November 8, 2010” saying that they believed that the Contractor had abandoned the contract and committed a fundamental breach.

The Contractor didn’t agree, but decided to treat this email as a repudiation and walked away from the contract. The Owner subsequently hired another builder to finish the job.

The Contractor then sued the Owner for its damages resulting from the repudiation. The Owners countersued, claiming the Contractor had abandoned the job and done substandard work.

The Decision – Who walked away first?

After assessing the evidence, the Court sided with the Contractor. While  parts of the work did not meet the Owners’ expectations, they were not so serious as to amount to a “fundamental” breach.  Further, the Court found that the Contractor did not abandon the project.

The result in this case came down to repudiation. The Court held that the Owners’ termination email repudiated the contract, by effectively indicating that the Owners no longer intended to be bound by it. This gave the Contractor the option to accept the repudiation, or reject it. The Contractor elected to accept the repudiation, and communicated this clearly within a reasonable time.

The Contractor was thus able to sue for damages resulting from the repudiation.

What does this mean for you?

Issues involving fundamental breach and repudiation are difficult – once you choose a position, it may be difficult to come back from it. Parties considering taking drastic steps should consider their options clearly before doing so.

The RPM Investment Corp case provides a cautionary tale – the Owners’ said that they didn’t mean to repudiate the contract, but the Court found that they had. This meant that their ability to sue the Contractor was limited to anything that happened before the repudiation. The Owners were also responsible for the costs of a new builder to finish the job, plus any damages that the Contractor suffered due to the early end of the contract.

If you think you may need to walk away from a contract, or you think that someone you hired may be abandoning their obligations, contact Ryan Krushelnitzky, lawyer and Partner with Field Law, to discuss your options.

Unilaterally amending payment terms by conduct alone…Nice try!

By: Catriona Otto-Johnston and Rob Watson

As a contractor, you might find yourself in a situation where the method for calculating payment originally agreed to in the contract becomes unworkable with the actual project scope or existing work-site conditions. Perhaps it would be beneficial to you if the contract contained different payment terms. While a contract can be changed through verbal or written agreement between the parties, can a party, by its actions alone, agree to revise payment provisions unilaterally imposed by another?

This issue was dealt with in Whissell Contracting Ltd v Calgary (City), 2017 ABQB 644. Whissell entered into a subcontract with SNC-Lavalin Graham Joint Venture (“SNC”) to perform certain work for the City of Calgary. The subcontract provided that payment would be calculated on a unit rate basis. Instead, Whissell began invoicing SNC on a force account basis claiming that soon after beginning work on the project, the scope of work and site conditions changed greatly from those anticipated at the time of its bid.  A number of force account sheets were signed by SNC field staff. SNC refused to pay Whissell based on Whissell’s force account rates, and Whissell applied for summary judgment. The Court dismissed Whissell’s application, taking issue with the fact that the wording on the force account sheets was never discussed with anyone at SNC who was involved in negotiating the original subcontract. The Court also noted that without additional evidence, change orders issued by SNC reflecting an increase in the value of the subcontract did not operate to amend the subcontract.

How does this decision affect you?

The lesson to be learned is that the Court isn’t likely to look kindly on contractors unilaterally taking matters into their own hands when trying to unilaterally change the payment terms of the contract. Clear communication, particularly with those involved in the initial contract negotiation, may save you from an uncertain contractual relationship and costly litigation.

If you are negotiating a contract, are in the process of attempting to revise the terms of a contract, or are involved in a dispute over a contract, Field Law can help. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, or Robert Watson, lawyer and Associate at Field Law, to discuss your options.

The devil is in the drafting: is an estate entitled to spousal support payments?

The recent Alberta Court of Queen’s Bench decision in Marasse Estate (Re), 2017 ABQB 706 is yet another reminder that drafting legal documents must be done carefully and with a view to their long-term effect. The main issue in this case was whether the surviving ex-spouse was obligated to continue paying spousal support to his deceased ex-spouse’s estate.

Justice Mah found that, based on the wording of the parties’ specific Separation Agreement, the husband was obligated to continue making spousal support payments to the deceased former wife’s estate.

By way of background, as part of their separation, the former spouses entered into a Separation and Property Agreement.  Both were represented by counsel.  Both parties knew that the wife had been ill for several years.  Under the Separation Agreement:

  • The husband agreed to pay monthly spousal support of $3,000 for 5 years;
  • The parties gave up their right to review or vary the entitlement, quantum and duration of spousal support even if there was a material change in circumstances of either party;
  • The husband was required to secure payment of the support through an insurance policy;
  • The agreement contained a relatively standard clause that it was binding upon and would enure to the benefit of the parties’ heirs, executors, administrators, successors and assigns

While the Separation Agreement dealt with the division of property should one spouse predecease the other, it was silent on how the spousal support payments would be treated if the wife died before all of the payments had been made.

The wife died about 8 months after signing the Separation Agreement.  According to its terms, the husband was still responsible for 52 monthly payments, equivalent to $156,000.  The wife’s daughter, who was her personal representative (and presumably a beneficiary), applied to the Court to enforce the Separation Agreement on behalf of her mother’s estate.

The husband sought to vary the agreement.  He argued that with the wife’s death, she no longer had an economic need for support.  The Court disagreed, finding that while contractual spousal support could reflect the theoretical bases of compensatory and non-compensatory spousal support, the parties did not have to adhere to those theoretical objectives when entering into separation agreements.

The husband also argued that spousal support was a personal right, which could not pass to an estate.  However, Justice Mah distinguished cases where spousal support was ordered by the Court, versus those cases where the parties agreed to pay support in a contract.  He considered the enurement clause, the non-reviewability clause and the comprehensive nature of the Separation Agreement to conclude that the Separation Agreement created a juristic reason to continue the support payments.  There was no reason to vary the Separation Agreement under the test set out in Miglin v Miglin as applied in Alberta.  The Court declared that the husband’s obligation continued notwithstanding the wife’s death.

In conclusion, individuals negotiating separation agreements should recognize the potential long-term effects of contractual spousal support payments on their estates.  Carefully consider your intentions and ensure that your separation documents truly and clearly reflect those intentions.

Thank you for reading!

-Predrag

It’s your funeral, but who calls the shots?

If you have a will, you may have spelled out your detailed wishes for your funeral in the document.  Would you be surprised to know that your personal representative does not have to follow them?  You may have also heard that funeral expenses get paid out from an estate in priority to all other expenses.  So, who actually has legal responsibility for arranging and paying for the funeral?  And what should you keep in mind at the outset when the question of funeral arrangements comes up?

 

Who has the legal duty for funeral arrangements?

In Alberta, it is well-settled that the personal representative named in a will has the sole legal responsibility and authority for making funeral arrangements.  That authority is confirmed by the Estate Administration Act, the Funeral Services Act, the Cemeteries Act and their respective regulations.  That means the personal representative does not have to follow funeral instructions in a will, though the vast majority do.

If there is no will or the personal representative is unavailable or refuses to give burial instructions, then the law gives the following people priority: spouse, adult child, parent, guardian, increasingly more distant relatives, with the Minister of Human Services being a decision-maker of last resort.  Where there are two or more individuals of equal rank, the right devolves on the eldest.  The Court has the discretion to vary the order of priority among all of the above categories.

 

Who has to pay for the funeral?

In Chernichan v Chernichan (Estate), 2001 ABQB 913, the Alberta Court of Queen’s Bench confirmed that the deceased’s estate has the primary responsibility to pay for the funeral expenses.

In that case, the deceased’s brother paid for the funeral out of his own pocket.  The personal representative used estate funds to pay out other estate debts before paying the brother back for the funeral expenses, leaving the estate insolvent.  The brother claimed that he should have been paid back in priority to all other creditors, including Canada Revenue Agency.

The Court conducted an in-depth review of the law and concluded that where the estate is insufficient to cover the funeral expenses, a secondary responsibility falls on the person responsible in law for supporting the deceased.  Therefore, a surviving spouse, adult interdependent partner or a parent of a minor child may have to make up the shortfall.  The residual responsibility to pay for the funeral rests with the Minister of Human Services.

In Chernichan, the Court also held that funeral expenses are entitled to a priority over other estate administration expenses and liabilities, except for the expenses of proving a will.  The personal representative, being the deceased’s wife, was ordered to pay the expenses to the brother.

 

What is a reasonable funeral?

The liability of the estate, the personal representative, and the responsible survivors for funeral expenses is limited to reasonable expenses.  There is no universal answer as to what is reasonable.  The analysis will depend on the deceased’s station in life, size of the estate and cultural background.  For example, in Lopushinsky Estate, 2015 ABQB 63, the Court held that a $26,000 funeral was reasonable given the deceased’s highly respected status in his community (the funeral required overflow seating and a video link to the service because of the number of attendees), the fact that he spent a similar amount on his wife’s funeral a year before, and the size of his estate.

 

Things to keep in mind at the start

On the planning side, pre-paid funeral arrangements may decrease family disputes about the type of funeral you want and will make the job easier for your personal representatives.  They also eliminate the risk of there being inadequate assets to pay for the funeral.

Whether you are an executor or a family member who is making funeral arrangements, always consider the reasonableness of the cost of the funeral in light of the deceased’s station in life and expressed wishes before making the final arrangements.

While personally paying the funeral expenses may be a generous gesture, one would be well advised to consider the likelihood that estate assets will be sufficient to reimburse those expenses.  Finally, ensure that your intentions with respect to the payment are documented at the outset – is the payment meant to be a gift or simply a short-term loan to the estate?

Funeral arrangements have the potential to set the tone for the rest of the estate administration.  Taking care to make the right decisions at the start is important and personal representatives and family members should not rush into decisions during the difficult and emotional time immediately following a loved one’s death.

 

Let us know if you have any questions or comments and thank you for reading.

-Predrag

You can ask for advice and directions

Acting as an executor or personal representative is a challenging job.  A personal representative is expected to follow the terms of a will, trust document or Court order and to do so prudently and competently.  Sometimes, the testator or the settlor of a trust adds to an already difficult job by creating an unclear will or trust document which leaves the personal representatives guessing as to the deceased’s true intentions.  Other times, what the beneficiaries want conflicts with the instructions in the will or trust.  Since personal representatives may be personally liable for decisions made in the course of their administration, they should ensure they are making the correct decision.

Fortunately, a personal representative who is faced with an unclear and confusing document or a situation not contemplated by the document can seek advice and directions from the Court.  Generally, if the Court provides directions and the personal representative follows them, they will not be personally liable even if the decision leads to a loss to one or more beneficiaries.

In Alberta, authority for seeking the Court’s advice and directions is found in several statutes.  Personal representatives can turn to the

  • Estate Administration Act, which allows a personal representative to apply to the Court for advice and directions on any question respecting the management or administration of an estate.  The personal representative is shielded from liability if he or she follows the Court’s direction on the particular issue.

 

  • Surrogate Rules, which give the Court a very broad discretion to consider applications for directions by personal representatives or persons interested in the estate regarding practice, procedural or other issues and questions and ways to resolve them and “any other matter that may aid in the resolution or facilitate the resolution of a claim, application or proceeding or otherwise fairly or justly resolve the matter for which direction is sought.”

 

  • Trustee Act, which has a similar provision to the Estate Administration Act, allowing trustees to apply for advice and direction and absolving them of liability when acting on the opinion, advice or direction of the Court as long as there is no fraud or misrepresentation by the trustee.

A Court will not make a personal representative’s decision or exercise discretion for him or her.  Therefore, a personal representative should come to Court with a particular plan of action, which the Court can approve, deny or modify.  Most often, the Court will give directions on the steps to be taken to bring about a desired result or to move a matter forward.  However, the Court can also make determinations of fact and substantive rights of one or more parties.  Courts have in the past given advice and directions to:

  • break a deadlock among personal representatives;
  • determine if a particular individual qualifies as a beneficiary;
  • determine if a charitable gift fails where a charity has been incorrectly described or no longer exists;
  • determine if it was prudent for a personal representative to pursue collection of certain assets by way of litigation, or whether it was prudent for the personal representative to use estate assets to defend a claim; and
  • set down litigation plans to ensure that a contentious matter begun under a related Act or under the Surrogate Rules proceeds efficiently and in a timely fashion.

This is not an exhaustive list and the broad discretion given to the Court makes the application for advice and direction a powerful tool to advance the administration of an estate or a trust.

If you are a personal representative in Alberta who needs some clarity on an estate or trust administration matter, Field Law can help.  Do not hesitate to contact me to discuss in more detail: ptomic@fieldlaw.com or 403.260.8511.

Thank you for reading.

Time is Tickin’ — Limitation Periods and Your Lien

Contributors: Catriona Otto-Johnston & Kendra Heinz

You’ve registered a lien; now what? You have to preserve (and prove) your lien. The Builders’ Lien Act (the “BLA) is rife with limitation periods, many of which, if missed, could jeopardize your lien. However, recent case law suggests that in certain circumstances, failure to meet one or more of these limitations might not be fatal. As a current or future lien claimant, it’s important that you understand how to navigate the BLA and the case law, and Field Law can help you.

Do I have to commence an action?

Under s.43 of the BLA, a lien ceases to exist unless an action is commenced and the lien claimant registers a certificate of lis pendens (CLP) in the land titles office within 180 days.

Exceptions to the Rule

In the recent decision of Homes by Element Construction Ltd (Re), 2017 ABQB 442, the Court considered whether a builders’ lien should be declared invalid because the lienholder failed to register a CLP within 180 days. The lienholder, Lupien Woodwork Ltd. (“Lupien”), registered its lien on June 22, 2015 on property owned by David and Tricia Fiegel (the “Fiegels”). On November 10, 2015 Lupien filed a Statement of Claim and a CLP but did not register the CLP at Land Titles. The 180 day period expired on December 20, 2016.

Notwithstanding s.43 of the BLA, the Court sided with Lupien and waived the requirement to file the CLP.  In making this finding, the Court held that because the Fiegels represented that they did not dispute Lupien’s claim and their lawyer advised Lupien it was practically unnecessary for them to file and serve a defence in the action, the cost of registering a CLP and insisting upon a defence would have served no useful purpose and made no sense in the circumstances. The Fiegels were estopped from putting the validity of the lien in issue and thus lack of a CLP at land titles was not fatal to Lupien’s lien.

How does this decision affect you?

As a lienholder it is crucial to ensure you meet the requirements of the BLA as non-compliance could very likely mean your lien will have expired.  While the Court may step in to save a lien in certain specific circumstances, you should not rely on this as a general practice when embarking down the path of filing and proving a lien.

If you are a lienholder and are uncertain of what your next step should be in order to enforce your lien, Field Law can help. For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law, to discuss your options.

Tips & Traps – Partial Payment from the 10% Holdback

By Catriona Otto-Johnston and Rob Watson

Setting the lien fund can be a complicated and drawn out process. As a subcontractor lienholder, you may find you are standing idly by for payment while the owner and the GC fight amongst themselves. Can you receive partial payment for your work before the lien fund is finalized? Yes, although the “pot” may not be as big as you think.

It’s well settled in Canadian case law that subcontractors with clear entitlements do not have to wait until all issues are settled before receiving partial payment based on the minimum holdback to be retained by the owner, being 10% of the value of the work actually done or materials actually furnished by the GC.

In Trotter and Morton Building Technologies Inc. v Stealth Acoustical &Emission Control Inc., (Stealth Energy Services), 2017 ABQB 431, the subcontractor lienholders, Trotter and Hamil, were seeking interim payment from the owner, Canadian Natural Resources Limited (“CNRL”), pending final determination of the lien fund. Deciding in favour of the lienholders, the Court set the interim payment at 10% of the amount that Stealth (the GC) was paid by CNRL despite CNRL claiming Stealth overbilled them resulting in overpayment by CNRL and an inflated 10% holdback. The Court sided with Trotter and Hamil, but noted it is arguable the 10% should be reduced where it is proven the owner overpaid.  In Trotter, CNRL provided no documentary evidence of overpayment.

How does this decision affect you?

As a lienholder, you may not need to wait until the lien fund is finalized to receive partial payment from the 10% holdback; however, while it’s well-settled that the owner can’t set off against the 10% holdback, the door is open for owners to argue for a reduction of the 10% based on proven overpayment.

If you are a lien claimant waiting for payment and think you might be entitled to seek partial payment from the 10%, Field Law can advise you of your options.  For more information, contact Catriona Otto-Johnston, lawyer and Partner with Field Law to discuss.

Things Left Unsaid – Determining Price Adjustment resulting from Scope Changes

By Matthew Turzansky and Catriona Otto-Johnston

It’s common for the parties to a construction contract to focus on the price of the work to be performed.  Less attention is often given to the method of calculating changes to the price for alterations to the scope of work.  Uncertainty in this area can lead to a major headache for a contractor trying to get paid, which all too often can lead to a trip (or two) to the Court house. So how can you avoid costly litigation and ensure you are paid for your work? We focus on the recent Alberta case of Architectural Millwork & Door Installations Inc v Provincial Store Fixtures Ltd, 2017 ABQB 390 to provide some helpful tips.

Architectural Millwork & Door Installations Inc v Provincial Store Fixtures Ltd, involved a $19 million stipulated-price contract for the performance of tenant improvements in The Bow tower in downtown Calgary.  The owner issued three Change Directives significantly reducing the contractor’s scope of work, and the parties found themselves disagreeing over how to calculate the credit due to the Owner.

At first blush, the Contract seemed to address this situation.  After all, the Contract Appendix containing Price and Payment Provisions included a set of 4 scenarios for the calculation of price reductions for scope deletions, depending on the nature and timing of the changes.  It should have just been a matter of applying the correct scenario, right?

Wrong.  The two scenarios that were potentially applicable both referenced certain “Unit Prices” in the Tender Documents.  The problem was, the Schedule of Unit Prices was struck out of the General Contractor’s bid form and omitted from the final Contract.

On what basis then should the price reduction be calculated?  The Court was faced with three options:

  1. Internal Estimating Documents – The General Contractor urged the Court to accept its internal estimate materials as “Tender Documents”, and to apply the Unit Prices in those documents. The Court rejected this on the basis that the owner could not have agreed to prices on internal estimating documents which were not disclosed to it as part of the bidding process.
  2. “Identified Prices” – The owner pointed to a different Appendix to the Contract listing certain “Identified Prices” for other purposes under the Contract. The Court rejected this as well.  It reasoned that the Contract would not have referenced “Unit Prices” if what was intended was actually the schedule of “Identified Prices”.
  3. Net Cost – The approach favoured by the Court was to attempt to determine the net cost of the deleted items, and to calculate the price reduction form the scope deletion on that basis.

Unsurprisingly, calculating the Net Cost of the deleted items was not a straightforward task.  The contractor argued that once the scope of work was significantly diminished, it shouldn’t have to honour the “Incentive Pricing” feature of its tender, used to persuade the owner to award them the entire project.  The Court rejected this argument and applied the incentive pricing anyway, noting this was a risk the contractor accepted when bidding on a project subject to possible scope deletion.

Given that the Net Cost adjustment did not contain a deduction for overhead and profit, the Court next had to calculate what portion of the price was attributable to these items.  After considering the evidence as to the total materials and shop time for the fabricated products on the project, as well as other provisions of the Contract, the Court landed on the rate of 7.5%, noting that this matched the mark-up permitted to be added where Changer Orders resulted in a net increase to the contract price.

The final result was a credit to the owner for the scope deletion in the amount of $1,525,919.67.

How does this decision affect you? Parties embarking on a new project are planning on the project unfolding as planned, but it is nevertheless important to take precautions in the event that plans change.  In the case of a deletion in the scope of work, a clear and complete contract containing a pricing mechanism can give the parties certainty, and avoid messy disputes.  For advice and assistance on drafting and interpreting construction contracts, contact Matthew Turzansky, lawyer and Associate, or Catriona Otto-Johnston, lawyer and Partner at Field Law.

“A rose by any other name? Not so!”: The critical role of “improvement” in the Builders’ Lien Act

Contributors: Sharn Mashiana (articling student), Andrew Wilkinson and Catriona Otto-Johnston

Do you know if the nature of your construction work on a project allows you to register a valid builders’ lien? You might be surprised to hear that not all types of work give rise to lien rights. In order for you to register a valid lien, the Builders’ Lien Act (the “BLA”) requires that the work you performed or the materials you supplied improve the lands on which the construction occurs. If your work or materials do not relate to an improvement, you will not be able to lien. It is therefore very important that you understand from the outset whether the work you are doing will allow you to register a lien against the project lands in the unfortunate event that you are not paid for your work.

Under the BLA, the definition of “improvement” generally includes anything constructed on the land but excludes those things not affixed or intended to become part of the land. There have been many Court decisions dealing with whether certain work or supply constitutes an improvement. In the right circumstances, the work of architects and engineers can be considered an “improvement”. Even the removal of land, through excavation, has been held to be an “improvement”.

Trotter and Morton Building Technologies Inc. v Stealth Acoustical & Emission Control Inc., 2017 ABQB 262 is a recent Alberta decision in which the Court considered whether pumphouse buildings were “improvements”. The buildings were designed so that, after they were affixed to the land, they could later be moved without damaging them. Given this potential for removal, the owner of the oilsands project argued that the buildings did not relate to an “improvement”.

The Court considered the following factors in finding that the pumphouse buildings were “improvements” and thus the liens were valid:

  • Location and function of the buildings
    • The buildings were to be placed at known and specifically designated and prepared locations
    • The buildings were fully integrated into the larger oilsands project
  • Size and weight of the structures
    • The buildings were large (their weight ranged from 200,000 to 260,000 pounds)
  • Degree of affixation of the structures
    • The building and its structural base were then anchored to 12-14 concrete piles, with a minimum pile depth of 72 feet

Additionally, the Court considered the likelihood of the pumphouse buildings staying on site. While the Court declined to assign a percentage to the likelihood that the pumphouse would stay on the site, it noted that the buildings were very large and heavy structures and were currently affixed to the land. They were intended to be put in place and operated as part of the overall project. Even if the buildings were moved, it was possible that they would simply be moved to another part of the site.

The Court held that even though the pumphouse buildings could be moved after being put into operation, that possibility was not sufficient to prevent them from being improvements.

The subcontractors in this case made an alternative argument that if the pumphouse buildings were not an improvement, the oilsands project to which the pumphouse buildings were to be supplied, was the improvement. The Court agreed with this argument and held that it is the improvement of the overall project that must be considered.

How does this decision affect you? Work or material furnished with respect to a moveable structure can still be an “improvement” so long as certain factors are met. This analysis requires a careful examination of the facts of each case and consideration of the criteria the Court will apply. For more information on requirements for lien registration, contact Andrew Wilkinson or Catriona Otto-Johnston, lawyers and Partners at Field Law, to discuss your options.