Executive Summary: Key Legal and Evidentiary Issues

• Appeal focused on whether Man-Shield (Alta) Construction Inc. should be held in contempt for not paying funds into court as previously ordered by the Court of Appeal.

• The underlying dispute arose from construction delays and lien claims related to a seniors’ care facility project in Edmonton, with Tempo Alberta Electrical Contractors Co. Ltd. as subcontractor and Man-Shield as general contractor.

• The chambers judge accepted Man-Shield’s evidence of negative financial and cash flow position, concluding Man-Shield had a reasonable excuse for not paying the ordered amount into court.

• The appellate court found no error in the chambers judge’s consideration of the evidence or in the finding of reasonable excuse for noncompliance.

• The appellate court determined the chambers judge erred in stating that the statutory trust issue under section 22 of the Builders’ Lien Act remained unresolved, as this was already decided in a prior appellate decision.

• The appeal was allowed only to set aside the portion of the order relating to the statutory trust issue, with costs awarded to Man-Shield except for costs and disbursements related to its late-filed factum.

Background and facts of the case

Tempo Alberta Electrical Contractors Co. Ltd. (“Tempo”) and Man-Shield (Alta) Construction Inc. (“Man-Shield”) have been involved in litigation since 2017 regarding the construction of a seniors’ care facility in Edmonton between 2015 and 2017. Shepherd’s Care, the owner, hired Man-Shield as the general contractor, who then subcontracted electrical work to Tempo. Construction was delayed by 45 weeks, leading both Man-Shield and Tempo to file builders’ liens on the property. Tempo issued a certificate of substantial performance on December 22, 2016, and filed liens in February and June 2017. The first lien was removed by court order on February 24, 2017, with Man-Shield replacing it with a bond. The second lien was removed by consent order on June 30, 2017, after Shepherd’s Care paid $1,199,439.15 into court as security for Tempo’s claim.

In February 2018, Man-Shield and Shepherd’s Care reached a settlement agreement, with Shepherd’s Care assigning Man-Shield its right to the money paid into court. In June 2020, an applications judge allowed Man-Shield to replace the $1,199,439.15 with a lien bond of the same amount. Tempo appealed this decision, ultimately resulting in a 2022 Court of Appeal order (Tempo 2022) requiring Man-Shield to pay $678,407.88 into court within 90 days. The Court determined that a statutory trust was triggered when Tempo issued the certificate of substantial performance in 2016, pursuant to section 22 of the Builders’ Lien Act.

Contempt application and chambers decision

Man-Shield did not pay the money into court as ordered. Tempo applied to have Man-Shield held in civil contempt. The chambers judge dismissed the application on June 14, 2024, accepting Man-Shield’s evidence of negative financial and cash flow position, as presented in affidavits and financial statements, and concluding that Man-Shield had a reasonable excuse for not paying the money into court. The judge also noted that the issue of whether the statutory trust had been breached could be addressed at trial.

Appeal and appellate court reasoning

Tempo appealed on three grounds: (1) the chambers judge failed to consider all relevant evidence; (2) the chambers judge erred in concluding Man-Shield had a reasonable excuse for not paying the money into court; and (3) the chambers judge erred in stating the statutory trust issue could be resolved at trial. The Court of Appeal found that the chambers judge considered all relevant evidence, including affidavits and transcripts, and made no palpable and overriding error in finding Man-Shield had a reasonable excuse for noncompliance. The appellate court agreed with Tempo that the statutory trust issue had already been resolved in Tempo 2022 and should not have been left open for trial. The provision in the order allowing the statutory trust issue to be asserted at trial was set aside.

Outcome

The appeal was allowed only with respect to the chambers judge’s conclusion that the statutory trust imposed by section 22 of the Prompt Payment and Construction Lien Act was an issue to be determined at trial. Paragraph 2(b) of the order dated June 14, 2024, was set aside. The appeal was otherwise dismissed. In accordance with rules 14.88 and 14.90(a)(i) of the Rules, Man-Shield was granted the costs of the appeal except for costs and disbursements related to its late-filed factum. No new monetary award was specified in this decision.