D & K Horizontal Drilling (1998) Ltd. (Bankrupt) v. Alliance Pipeline Ltd. et al., (2002) 216 Sask.R. 199 (QB)

• Judge: Barclay, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: March 08, 2002
• Jurisdiction: Saskatchewan
• Citations: (2002), 216 Sask.R. 199 (QB);2002 SKQB 86

D&K Horizontal v. Alliance Pipeline (2002), 216 Sask.R. 199 (QB)

MLB headnote and full text

Temp. Cite: [2002] Sask.R. TBEd. AP.012

PriceWaterhouseCoopers Inc., Trustee in bankruptcy for D & K Horizontal Drilling (1998) Ltd. (applicant) v. Alliance Pipeline Ltd., J. Wright Construction Ltd., MSI Energy Services Inc., Smoky Oilfield Services Ltd. (a division of Montero Oilfield Services Ltd.), Waschuk Pipeline Construction Services Ltd., Wadeco Oilfield Services Ltd., Weatherford Canada Ltd., carrying on business as Grant Prideco Canada, McGill's Industrial Services Ltd., Phoenix Oilfield Hauling Ltd., Conter Investments Ltd., carrying on business as Kodiak Vac and Environmental Services, Sandy's Oilfield Hauling Ltd., Ceda-reactor Ltd. and 303567 Saskatchewan Ltd., carrying on business as Handyman Rental Centre (respondents) and MSI Energy Services Inc. (respondent) and The Attorney General for Saskatchewan (respondent)

(2000 Q.B.G. No. 2966; 2002 SKQB 86)

Indexed As: D & K Horizontal Drilling (1998) Ltd. (Bankrupt) v. Alliance Pipeline Ltd. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Barclay, J.

March 8, 2002.

Summary:

An owner held back monies owing under a building contract, including statutory holdback under the Builders Lien Act (BLA). The contractor became bankrupt. Subcontractors claimed under the BLA and filed liens against the land. Pursuant to a court order, the owner paid the monies owing into court and the liens were vacated. The bankruptcy trustee applied for an order determining entitlement to the monies paid into court.

The Saskatchewan Court of Queen's Bench held that the monies paid into court, to the extent of the lien claims, were not property of the bankrupt. Alternatively, ss. 56(1), 56(2) and 56(6) of the BLA were not in operational conflict with the Bankruptcy and Insolvency Act and the money paid into court should be paid out in accordance with the BLA.

Bankruptcy - Topic 3645

Creditors - General - Priorities - Statutory liens and charges - Force and effect of - An owner held back monies owing under a building contract, including statutory holdback under the Builders Lien Act (BLA) - The contractor became bankrupt - Subcontractors claimed under the BLA and filed liens against the land - Pursuant to a court order, the owner paid the monies owing into court and the liens were vacated - The Saskatchewan Court of Queen's Bench held that the monies paid into court, to the extent of the lien claims, were not property of the bankrupt - Alternatively, ss. 56(1), 56(2) and 56(6) of the BLA were not in operational conflict with the Bankruptcy and Insolvency Act and the money paid into court should be paid out in accordance with the BLA - See paragraphs 1 to 24 and 45.

Bankruptcy - Topic 3645

Creditors - General - Priorities - Statutory liens and charges - Force and effect of - The Saskatchewan Court of Queen's Bench stated that "Where an application has been made to vacate the lien under s. 56(6) of the BLA [Builders' Lien Act], the effect of the order is that the lien is not discharged, it merely causes it to cease to attach to the land, holdback and contract amount and attaches instead to the money paid into Court. In other words, the effect of the order is that once the liens are vacated a charge is created by virtue of s. 56(6) of the BLA and therefore the money is subject to a security interest in favour of the lien claimants. By virtue of s. 136 of the BIA [Bankruptcy and Insolvency Act] once a lien has been established the property is not subject to distribution." - See paragraph 24.

Building Contracts - Topic 2426

Payment - Holdback - Holdback for benefit of third parties - Rights of third parties to holdback - [See first Bankruptcy - Topic 3645 ].

Constitutional Law - Topic 1651

Extent of powers conferred - Overlapping doctrine - Bankruptcy and insolvency - [See first Bankruptcy - Topic 3645 ].

Constitutional Law - Topic 6265

Federal jurisdiction (s. 91) - Bankruptcy and insolvency - Provincial legislation - Statutory liens - [See first Bankruptcy - Topic 3645 ].

Mechanics' Liens - Topic 5053

Obtaining a lien - Vacating registered lien - Effect of - [See second Bankruptcy - Topic 3645 ].

Cases Noticed:

Husky Oil Operations Ltd. v. Minister of National Revenue et al., [1995] 3 S.C.R. 453; 188 N.R. 1; 137 Sask.R. 81; 107 W.A.C. 81, refd to. [para. 26].

Bourgault's Estate v. Deputy Minister of Revenue of Quebec, [1980] 1 S.C.R. 35; 30 N.R. 24, refd to. [para. 27].

Deputy Minister of Revenue v. Rainville - see Bourgault's Estate v. Deputy Minister of Revenue of Quebec.

Jacs Jackets and Crest Ltd., Re; Workers' Compensation Board (Alta.) v. Deloitte Haskins and Sells Ltd., [1985] 1 S.C.R. 785; 60 N.R. 81; 63 A.R. 321, refd to. [para. 27].

Federal Business Development Bank v. Commission de la santé et de la sécurité du travail et al., [1988] 1 S.C.R. 1061; 84 N.R. 308; 14 Q.A.C. 140, refd to. [para. 27].

British Columbia v. Henfrey Samson Belair Ltd., [1989] 2 S.C.R. 24; 97 N.R. 61, refd to. [para. 28].

Factory Window and Door Ltd. (Bankrupt), Re (1995), 135 Sask.R. 235 (Q.B.), dist. [para. 30].

Roscoe Enterprises Ltd. v. Wasscon Construction Inc. et al. (1998), 169 Sask.R. 240 (Q.B.), dist. [para. 30].

Troup Ltd. (John M.M.) et al. v. Royal Bank of Canada, [1962] S.C.R. 487, folld. [para. 35].

Giffen (Bankrupt), Re, [1998] 1 S.C.R. 91; 222 N.R. 29; 101 B.C.A.C. 161; 164 W.A.C. 161, refd to. [para. 40].

Kozan Furniture (Yorkton) Ltd. Estate v. Countrywide Factors Ltd., [1978] 1 S.C.R. 753; 14 N.R. 91, refd to. [para. 41].

Robinson v. Countrywide Factors Ltd. - see Kozan Furniture (Yorkton) Ltd. Estate v. Countrywide Factors Ltd.

Town-N-Country Plumbing & Heating (1985) Ltd. et al. v. Schmidt et al. (1991), 93 Sask.R. 278; 4 W.A.C. 278 (C.A.), refd to. [para. 43].

Statutes Noticed:

Builders' Lien Act, S.S. 1984-85-86, c. B-7.1, sect. 56(1), sect. 56(2) [para. 45]; sect. 56(6) [para. 19].

Authors and Works Noticed:

Houlden, L.W., and Morawetz, Geoffrey B., The 2001 Annotated Bankruptcy and Insolvency Act (2001), p. 271 [para. 38].

Counsel:

Peter T. Bergbusch, for PriceWaterhouseCoopers Inc.;

Matthew R. Lindsay, for Alliance Pipeline Ltd.;

D. Frank Quennell, for Waschuk Pipeline Construction Services Ltd.;

Mark L. Millar, for Conter Investments Ltd.;

William D. Preston, for MSI Energy Services Inc.;

Robert M. Baumgartner, for Phoenix Oilfield Hauling Ltd.;

Graeme G. Mitchell, Q.C., for the Attorney General for Saskatchewan.

This application was heard by Barclay, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following decision on March 8, 2002.