Executive Summary: Key Legal and Evidentiary Issues

• Michels Canada Co. filed a builders' lien against Manitoba Hydro under s. 16 of the Builders' Liens Act (BLA) after invoices exceeding $1.4 million for subcontract work were left unpaid by Wawasum Energy Inc.
   
• Central to both proceedings was whether the ss. 3(3) exemption of the BLA — which excludes its application to contracts related to hydro-electric generating stations and "plant appurtenant thereto" — applied to work performed on Hydro's subtransmission and distribution lines.
   
• Competing interpretations divided the parties: Wawasum argued for a broad reading that would bar any lien on any part of the Hydro network, while Michels and Hydro both urged a narrower construction limited to infrastructure directly connected to generating stations.
   
• Applying the modern approach to statutory interpretation and the shared meaning rule, the court found that a "plant" in ss. 3(3) must constitute an industrial establishment performing a transformative function, a standard that wooden utility poles and distribution lines do not meet.
   
• Hydro sought interpleader relief to pay the withheld funds of $921,521.30 into court, having faced competing claims from Wawasum, Michels, and the Canada Revenue Agency, which asserted a super-priority over $148,300.73 plus accrued interest for unremitted payroll and GST debts.
   
• The court upheld the validity of the Michels lien, granted Hydro's interpleader order, directed payment of CRA's super-priority claim from the Funds, and deferred resolution of the remaining competing claims to a trial in the Lien Action scheduled for December 2027.

Facts of the case

In 2019 and 2023, Manitoba Hydro ("Hydro") entered into two separate contracts with Wawasum Energy Inc. ("Wawasum") to perform maintenance work on its subtransmission and distribution electrical lines (the "Projects"). Wawasum subcontracted portions of this work to Michels Canada Co. ("Michels"). After invoices for Michels' work on the Projects in excess of $1.4 million went unpaid by Wawasum, Michels filed and served a lien on Hydro pursuant to s. 16 of the Builders' Liens Act, C.C.S.M. c. B91 (the "BLA"). Hydro was then withholding $921,521.30 (the "Funds") from Wawasum — amounts it was contractually obligated to pay — comprising two 7.5 per cent holdbacks: one mandated by the BLA and one relating to performance-based contractual provisions.

Michels subsequently filed a statement of claim in suit no. CI 24-01-47041 against Wawasum, Hydro, and the Government of Manitoba, among others, seeking final judgment for unpaid work and other relief under the BLA (the "Lien Action"). Wawasum filed a statement of defence and counterclaim in the Lien Action, denying amounts were owing and alleging contractual breaches by Michels as to work quality and invoice accuracy. The Lien Action proceeded to pre-trial before Suche J. in the Fall Term of 2025, who directed two questions to be answered in advance of trial: whether the lien was facially valid under ss. 3(3) of the BLA, and what amount of the Funds Hydro should pay into court under the interpleader action it had commenced.

Hydro sought interpleader relief (the "Interpleader Action") because paying the Funds to one claimant risked exposure to liability from the others. The Canada Revenue Agency ("CRA") separately claimed a super-priority over a portion of the Funds, seeking to have Hydro pay out Wawasum's tax liabilities in full before any surplus was paid into court. The CRA's claims against Wawasum totalled in excess of $535,000, encompassing unremitted source deductions, penalties, interest, and unremitted GST.

Policy and legislative provisions at issue

The pivotal provision was ss. 3(3) of the BLA, which states that the Act does not apply to contracts, or work related to contracts, entered into by Manitoba Hydro with respect to or in any way associated with "the construction, repair or maintenance of hydro-electric generating stations or facilities, and plant appurtenant thereto." The equivalent French version reads "des usines y annexées." Section 3(1) of the BLA makes the Crown and its agencies — including Hydro — bound by the Act, while ss. 3(2) exempts work done under contracts governed by The Infrastructure Contracts Disbursement Act, C.C.S.M. c. I36. The court also considered s. 16 of the BLA (liens against the Crown), s. 1 of The Manitoba Hydro Act, C.C.S.M. c. H190 (the "Act") defining "power plant," ss. 2(1) setting out the Act's purposes and objects, and ss. 4(4) prohibiting court proceedings that would affect the supply of power to any person. Rule 43 of the Court of King's Bench Rules, M.R. 553/88, governed the interpleader application.

All three parties relied on American Piledriving Equipment, Inc. v. Manitoba Hydro, 2018 MBQB 27, in which Kroft J. concluded that ss. 3(3) of the BLA barred a lien action filed by a subcontractor in relation to work performed at a converter station — a key component of a Hydro mega project located 120 kilometres from the nearest generating station. Wawasum argued that American Piledriving governed the present case and that there was no principled basis to distinguish between a converter station and the subtransmission and distribution lines Michels worked on. Michels and Hydro, by contrast, argued for a narrower reading, contending that the wooden utility poles and lower-voltage distribution lines were not physically annexed to or essential to the operation of the generating stations themselves.

Reasoning and analysis

Applying the modern approach to statutory interpretation as articulated in Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), and R. v. Carignan, 2025 SCC 43, Rempel J. began with the text of ss. 3(3). The court found that the grammatical structure of the provision required more than asking whether a piece of infrastructure was "appurtenant" to a hydro-electric generating station: the appropriate question was whether the infrastructure qualified as "plant appurtenant thereto" — meaning the phrase "appurtenant thereto" modifies the noun "plant," not the term "hydro-electric generating stations or facilities" directly.

Applying the shared meaning rule from R. v. Daoust, 2004 SCC 6, and Piekut v. Canada (National Revenue), 2025 SCC 13, the court considered the narrower of the English word "plant" and the French word "usine." The French Multidictionnaire de la langue française and the dictionnaire Larousse both defined "usine" as an industrial establishment where raw materials are transformed into products. This definition accorded with the narrower of two relevant definitions of "plant" found in the Dictionary of Canadian Law (Second Edition). The court concluded that a "plant" in the context of ss. 3(3) of the BLA is an industrial establishment that performs a transformative function, and that wooden utility poles and the subtransmission and distribution lines attached to them were simply a means to deliver power to customers — they did not perform any transformative function and could not reasonably be characterized as "factories" or "industrial establishments." A direct physical connection to a generating station was not required, but the infrastructure in question had to first qualify as a "plant."

The court also applied the implied exclusion rule, noting that ss. 3(3) is directly preceded by the broader exemption in ss. 3(2) — which excludes liens where The Infrastructure Contracts Disbursement Act applies and provides subcontractors with an alternative protection scheme — and that ss. 3(3) provides no comparable alternative scheme for subcontractors whose work falls within its scope. This absence supported interpreting ss. 3(3) narrowly. The rule that exceptions to general rules are to be construed strictly, as established in Air Canada v. British Columbia, 1989 CanLII 95 (SCC), further reinforced the narrower interpretation. The use of the word "certain" in the English heading of ss. 3(3) — and "certains" in the French — also militated in favour of a limited rather than a blanket exclusion. The court further found consistency between its interpretation and the definition of "power plant" in s. 1 of the Act, which is restricted to infrastructure involved in the development or generation of power.

The court rejected Wawasum's argument that ss. 4(4) of the Act supported a broader reading, finding it unclear why a lien action filed by a subcontractor working on distribution poles would impact the supply of power to any person, given evidence that the grid system has been designed for work-arounds and that subtransmission and distribution infrastructure is generally regarded as temporary and reconfigurable. The court also noted that the contracts signed between Hydro and Wawasum, and between Wawasum and Michels, explicitly contained provisions requiring holdback funds to be maintained in accordance with the BLA — a feature the court found consistent with an understanding by all three parties that the ss. 3(3) exclusion did not apply to the Projects. On the interpleader question, the court was satisfied that Hydro met all requirements under Rule 43.02 of the Court of King's Bench Rules, having disclaimed any beneficial interest in the Funds and demonstrating a genuine expectation of competing claims.

Ruling and overall outcome

Rempel J. held that the ss. 3(3) exemption of the BLA does not apply to the work performed by Michels in this case, and that the lien filed by Michels is therefore valid. Hydro was granted the interpleader relief it sought. The court ordered that Hydro pay CRA $148,300.73 plus accumulated interest in respect of the enhanced requirements to pay for unremitted payroll and GST debts — an amount all parties agreed constituted a super-priority overriding all competing claims, including any valid liens under the BLA. Hydro was also entitled to deduct its legal costs under Tariff A, Class 4 in the sum of $4,044.50. The remaining balance of the Funds is to be paid into court, the Michels lien is to be discharged upon payment, and Hydro is to be released from the Lien Action upon payment of the Funds. The court deferred the question of whether CRA holds a superior position to Michels with respect to the remaining Funds under its standard Requirement to Pay to the Lien Action trial, which is scheduled to commence in December 2027. Costs of the motion are to be addressed at the conclusion of that trial.