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.

A different kind of joint problem

Parents who intend to transfer their assets into joint names with some or all of their adult children need to carefully consider that decision before implementing the transfers.  A series of recent Court cases in Western Canada highlight the need for careful legal advice when parents are considering such transfers in the context of estate planning or family business operations.

In Canada, ownership of property as a joint tenant carries with it the right of survivorship. In simple terms, it means that the joint owner who survives the longest stands to inherit the entire asset.  However, in 2007 the Supreme Court of Canada confirmed a general rule that when parents transfer property into joint names with adult, independent children without receiving any consideration in return, the law presumes that on the parent’s death, the child holds the property on a resulting trust for the parent’s estate.  If the surviving child (who stands to inherit the whole property by right of survivorship) can show that the parent’s intention at the time of the transfer was actually to gift the property to that child, then they can overcome the presumption.  If the child is unable to rebut the presumption, he or she would have to distribute it in accordance with the parent’s will or the applicable intestacy rules.

While there are some useful reasons why a parent may want to hold property with an adult child in such a manner, there are a number of potential pitfalls and problems, which the cases below illustrate:

  1. Coates v Coates, 2017 SKQB 303: a mother placed a series of properties in joint names with her four children as part of the family’s estate plan. One of the children was financially irresponsible and had a judgment against him for various debts.  The creditors registered the judgment against title to the family property, which was ultimately sold to pay out the son’s judgment.  Seeing the potential for similar actions in the future, the mother asked the children to transfer the properties back to her name alone.  All but the financially irresponsible child agreed, and the mother was forced to sue him on the basis that he held the property on resulting trust for her.The Saskatchewan Court of Queen’s Bench confirmed that in that province, the Land Titles Act had abolished the presumption of resulting trust.  However, the mother had sufficient documentary evidence to prove that she had not intended to immediately gift the property to her children when she placed their names on title.  Rather, the intention was for them to inherit the beneficial title to the property only upon her death.

    In this case, there was sufficient and detailed written evidence of the mother’s estate plans in the form of a will and a testamentary agreement with her children.  In most cases we see, that is not the case, and the Court and the parties are left to piece together various bits of circumstantial evidence to determine the transferor’s intention.

  2. Heebner v Heebner, 2017 SKQB 343: this case also concerned parents who were suing their son after they transferred title to a number of properties into joint names with him as part of an estate plan. The parents brought a summary judgment application to direct the transfer of the lands back into their names.  The Court ruled there was insufficient evidence to grant the judgment at this stage, but made a number of procedural orders and directed that the matter return for a hearing after further evidence was adduced.
  3. Kyle Estate v Kyle, 2017 BCCA 329: this was a dispute between siblings about the proceeds of a bank account placed into joint names by their deceased father and one of the children, C. The trial judge found that the presumption of resulting trust applied and that C’s evidence was insufficient to rebut it.  The judge concluded that it was the father’s intention to provide C with funds which would be shared equally to all four children upon his death.On appeal, the court reviewed the principles set out in the Pecore case and did not find a reviewable error.  The Court of Appeal found that it was open to the judge to draw the conclusions he did based on the evidence at trial and confirmed that the funds in the joint bank account were held on resulting trust for the father’s estate.
  4. Finally, in Alberta, the Court of Queen’s Bench just released a decision in Pohl v Midtal, 2017 ABQB 711, yet another illustration of the dangers of transferring property to children as joint owners. The case was initially litigated years ago, and in 2014 the Court found that the daughter had rebutted the presumption of resulting trust and had established the parents’ intention to gift the right of survivorship. The parents then tried to sever the joint tenancy under the procedure set out in the Land Titles Act.The Court concluded that the when the parents had transferred the property, they had irrevocably gifted the right of survivorship to their daughter.  That meant they had given up their ability to now try and sever the joint tenancy.

    While the Court limited the decision to the facts of this case, it is an important reminder that at the end of the day, the evidence will determine the result.  Had the parents in this case obtained proper legal advice, they may have been able to document their intentions more clearly (like in the Coates case above) to avoid the finding of an irrevocable intention to gift.

If you are a parent contemplating transferring your property into joint names with some or all of your children, or the adult child who will be receiving the property, we would be happy to begin the discussion about the potential consequences of the transfer.

Thank you for reading and have a great weekend!

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

My last will and textament

What would you look for in a document to determine if it was a legally valid will?  An Australian man’s estate recently made headlines when the Queensland Supreme Court admitted an unsent text message into probate as his valid last will.

The deceased created the following text message on his cell phone shortly before he committed suicide:

“Dave Nic you and Jack keep all that I have house and superannuation, put my ashes in the back garden with Trish Julie will take her stuff only she’s ok gone back to her ex AGAIN I’m beaten . A bit of cash behind TV and a bit in the bank Cash card pin 3636

MRN190162Q

10/10/2016

My will”

The message was addressed to the deceased’s brother and purported to leave the estate to him and a nephew.  The deceased was also survived by his wife, though the marriage was apparently tumultuous and short-lived, and an estranged son.  The unsent message was found in the drafts folder.

The judge considered the detail of the deceased’s instructions about the disposition of his assets (like providing the PIN to his bank account, location of cash).  Other evidence, such as the deceased’s strained relationship with his wife and estranged son, contrasted with a close relationship with his brother and nephew, the fact his phone was found next to him and that he concluded the text with the words “My will” further solidified the Court’s analysis that he intended the text message to operate as his will.  You can read the full Court decision here: Re Nichol, Nichol v Nichol [2017] QSC 220.

Could this happen in Alberta?

A simple text message like the one in the Nichol estate would likely not qualify as a valid will in Alberta.  However, like the Queensland law at the centre of that case, Alberta law gives the Court leeway to validate a document that does not comply with all of the requirements for a valid will if there is sufficient evidence to convince the Court the deceased intended the document to act as his or her will.

To start, how do you make a valid will in Alberta?  The Wills and Succession Act requires a will to be:

  • in writing;
  • signed by the testator;
  • in the presence of two witnesses;
  • both of whom are present at the same time; and
  • each of whom signs the will in the testator’s presence.

Alberta law also allows “holographic” wills: wills which are written entirely in the deceased’s handwriting and signed by the deceased, in which case no witnesses are required.

If the deceased doesn’t comply with those requirements, the Court could consider two sections of the Wills and Succession Act to validate the document:

  • section 37: the Court can dispense with the formalities if satisfied on clear and convincing evidence that the writing sets out the testamentary intentions of the testator and was intended by the testator to be his or her will. One thing the Court cannot dispense with under this section is the requirement of a signature.  Therefore, it would be of little help with a text message; or

 

  • section 39: the Court could rectify a document by inserting a signature only if satisfied that the deceased intended to sign the document and give it effect as a will, but failed to do so because of “pure mistake or inadvertence.” This is meant to be used in narrow circumstances, and given the facts in Nichol, likely couldn’t have saved the text message without more – on those facts, the failure to sign was probably not a result of mistake or inadvertence, but a deliberate decision.

These powers are relatively new in Alberta and have not been widely considered by our Courts.  While there are a handful of reported decisions, none have considered the level of departure from the formalities found in Nichol.  However, we will likely see attempts to push the boundaries in the years to come as people change the way they manage and create their legal documents.

Contact us if you are unsure whether you are dealing with a proper will.  Even if it doesn’t have all of the formalities, an Alberta Court may recognize it as a valid testamentary document, which may drastically alter the administration and distribution of an estate.

Thank you for reading,

-Predrag

PS – Our friends at Hull and Hull also recently wrote about this case from an Ontario perspective.

(Don’t) live together, love together

A frequent area of estate litigation involves claims by adult interdependent partners against the estates of their deceased partners.  An adult interdependent partner is roughly the Alberta equivalent of a common law spouse, but may include other types of relationships.

To qualify as an adult interdependent partner, two people must cohabit in a relationship of interdependence continuously for at least 3 years, unless they have a child together or have entered into a written partner agreement.  Where there are no children or agreements, one of the first things we will want to see is evidence of the length of cohabitation.  This is a complex analysis which requires more than a review of the couple’s address history during the last three years of the deceased’s life.

In the recent case of Wright v Lemoine, 2017 ABQB 395, the Alberta Court of Queen’s Bench confirmed that cohabitation does not necessarily mean living under the same roof.  Courts in Ontario, British Columbia and even in Tasmania have arrived at the same conclusion.

In Wright v Lemoine, Ms. Wright sought adult interdependent partner support from Mr. Lemoine.  One of the key issues was whether the couple lived together continuously for at least three years. Due to his work schedule, he was frequently away in remote locations.  When he was not working, the couple spent time together in hotels or at his home in Saskatchewan.  Shortly after the relationship began, Mr. Lemoine purchased a trailer in which the couple resided when he was in town.  Sometimes Ms. Wright joined him at his work locations and they went on several extended vacations together.  When Mr. Lemoine was away, Ms. Wright stayed with her mother.  In the three years prior to their separation, 26 days was the longest time the two spent apart.

Mr. Lemoine asserted that as a result of frequent interruptions of their co-residence, the parties did not cohabit continuously for three years.  He also pointed to the fact that Ms. Wright kept her mother’s residence as her mailing address for the duration of the relationship.

Following an extensive review of the evidence and the existing case law, Justice Nixon held that the couple cohabited for the necessary period, and confirmed that the requirement for cohabitation did not equate to co-residence.  The judge reiterated that a flexible approach was necessary and that the couple’s intention was a key factor for determining whether they have cohabited for the purpose of the legislation.  Mr. Lemoine’s unique work schedule was not enough to displace the couple’s intention to live together when he was back from work.

A different illustration of the same principle can be found in this very recent decision of the Full Court in Hobart, Tasmania.  In that case, the deceased and his alleged common law spouse had not cohabited for much of their 23-year relationship because the deceased was a hoarder and his spouse had found it unbearable to live in the same residence as him.  Nonetheless, there was sufficient evidence that they saw each other almost every night, that they had an exclusive sexual relationship and were considered in the community as a couple.  The judge concluded that despite the daily separation, the relationship was significant and continuous for the amount of time required by the relevant legislation, such that the spouse was entitled to the whole of his estate.

In Alberta, a finding that a person was the deceased’s adult interdependent partner could have a significant impact on an estate.  It may entitle the surviving partner to a significant portion of the estate if there is no will, a right to make a claim for maintenance and support even where there is a will, and the priority to administer the estate.

We have experience with analyzing the required elements of the legislation together with the factual matrix to advise whether someone meets the legal definition of an adult interdependent partner.  Feel free to contact me if you think someone’s status may have an impact on an estate you are dealing with.

Thank you for reading!

-Predrag (Peter) Tomic

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.