Digest: Saskatchewan Power Corp. v Mainline Industrial Ltd. Partnership, 2018 SKQB 222

• Date: August 18, 2019

Reported as: 2018 SKQB 222

Docket Number: QB18226 , QBG 738/17 JCR

Court: Court of Queen's Bench

Date: 2019-08-18

Judges:

• Barrington-Foote

Subjects:

• Builders� Liens � Priorities
• Statutes � Interpretation � Builders� Lien Act, Section 15, Section 70

Digest: The applicant, Saskatchewan Power Corporation, paid $403,800 (the fund) into court under s. 57 of The Builders� Lien Act (BLA) in satisfaction of its obligations: 1) pursuant to its contract with Mainline Industrial; 2) under The Builders� Lien Act (BLA), to respondent subcontractors (Commercial Sand Blasting, Spartan Scaffolding, ATCO, Thermal Systems, G.T. & H. Holdings and Redriver Lumber); 3) under The Enforcement of Money Judgments Act, to the respondent EMCO; and 4) an assignment of accounts receivable by Mainline to Liquid Prairie Corp. pursuant to a Full Factoring Agreement (agreement). The same order also provided payment out of court on an application by any interested party. In November 2017, Commercial applied for an order that the fund be paid out and distributed pro rata to the subcontractors. The Minister of National Revenue claimed priority and entitlement to the fund pursuant to the deemed trust provisions of s. 227 of the Income Tax Act (ITA). The claim was comprised of employer contributions and amounts withheld from Mainline�s employees� salaries pursuant to the ITA, the Canada Pension Plan and the Employment Insurance Act. Liquid, a commercial factor, claimed entitlement to the fund as an absolute assignee pursuant to the agreement.
HELD: The application made by Commercial was granted. It and the other respondent contractors were entitled to the requested relief. The court found with respect to the Crown�s claim that the deemed trust in favour of it did not apply to any part of the holdback receivable or any part of the fund. The terms of the agreement permitted the assignment of the receivables subject to the liens and trust imposed by the BLA at the time they were factored, and there was no evidence that the ordinary course of factoring for construction contracts generally excludes receivables relating to holdbacks. The Crown was not entitled to any portion of the fund as against Liquid or as against the subcontractors. Regarding Liquid�s claim, the court found that the meaning of �assignment� in s. 70(2) of the BLA includes absolute assignment to ensure that the interests of lien claimants could not be defeated by way of assignment....