{"id":28956,"date":"2025-03-03T12:04:08","date_gmt":"2025-03-03T17:04:08","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=28956"},"modified":"2025-03-03T12:33:29","modified_gmt":"2025-03-03T17:33:29","slug":"consent-order-sufficient-commence-lien-proceedings-alberta-court-of-appeal-decision-chandos-construction-ltd-v-deloitte-restructuring-inc","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/construction-and-infrastructure-law\/consent-order-sufficient-commence-lien-proceedings-alberta-court-of-appeal-decision-chandos-construction-ltd-v-deloitte-restructuring-inc\/","title":{"rendered":"Is a consent order sufficient to commence lien proceedings? The Alberta Court of Appeal\u2019s decision in Chandos Construction Ltd. v. Deloitte Restructuring Inc."},"content":{"rendered":"\n

In Chandos Construction Ltd. v. Deloitte Restructuring Inc<\/em> (the \u201cChandos<\/em> Decision<\/strong>\u201d), the Alberta Court of Appeal (the \u201cABCA<\/strong>\u201d) recently considered whether an insolvent lien claimant was barred from enforcing its lien due to the potential expiry of the applicable limitation period.[1]<\/a> This decision raises important issues for Alberta construction litigators, regarding the commencement of limitation periods in lien proceedings and, specifically, what qualifies as a claim to \u201cseek a remedial order\u201d within the meaning of section 3(1) of the Limitations Act<\/em>.[2]<\/a><\/p>\n\n\n\n

Factual and procedural background<\/h2>\n\n\n\n

Capital Steel Inc. (\u201cCapital Steel<\/strong>\u201d) was a subcontractor to Chandos Construction Ltd. (\u201cChandos<\/strong>\u201d) on a project for the construction of a condominium in St. Albert named \u201cThe Botanica.\u201d Capital Steel filed an assignment in bankruptcy on September 8, 2016, and Deloitte Restructuring Inc. was appointed as its trustee.<\/p>\n\n\n\n

On October 26, 2016, the trustee filed a builders\u2019 lien on behalf of Capital Steel in the amount of $150,720.58. On November 8, 2016, the parties entered a Consent Order (the \u201cNovember 2016 Consent Order<\/strong>\u201d) to discharge the lien upon Chandos\u2019 payment of $165,801.44 into court.[3]<\/a> The November 2016 Consent Order predates the template form of order published by the courts for the payment of security to discharge a lien, and includes the following wording:[4]<\/a><\/p>\n\n\n\n

    \n
  1. This Order shall be filed as the Originating pleading in this Action.<\/li>\n\n\n\n
  2. The applicant is granted leave to pay into this Honourable Court the amount of $165,801.44. \u2026<\/li>\n\n\n\n
  3. The Registrar of the Northern Alberta Land Registration District shall [discharge the lien on payment into court].<\/li>\n\n\n\n
  4. Any interested party may apply to this Honourable Court to:\n
      \n
    1. dispute the validity and amount of the Lien;<\/li>\n\n\n\n
    2. dispute the liability of the Applicant to the Respondent;<\/li>\n\n\n\n
    3. determine a lesser amount of the Security or to set the lien fund; or<\/li>\n\n\n\n
    4. set off any amount against the Security where set off is otherwise permitted by law.<\/li>\n<\/ol>\n<\/li>\n\n\n\n
    5. The determination of the issues between the parties is adjourned sine die<\/em>.<\/li>\n<\/ol>\n\n\n\n

      At this stage, the focus of the litigation shifted to a disagreement over the amount of money Chandos might owe to Capital Steel, primarily based on the interpretation of a contractual clause providing that Capital Steel would forfeit of a portion of the subcontract price in the event that it was, among other things, assigned into bankruptcy. The significance of this issue, as described by the ABCA, was that if the clause was enforceable, \u201cthe amount owed by Chandos to Capital Steel, and thus the amount protected by the lien, was de minimis<\/em> or even \u201cnil\u201d.\u201d [5]<\/a><\/p>\n\n\n\n

      On March 6, 2017, the trustee brought an application for advice and direction regarding the enforceability of the clause. The chambers judge found the clause to be enforceable; however this decision was overturned on appeal in January 2019.[6]<\/a> The ABCA\u2019s ruling on this issue was later upheld by the Supreme Court of Canada (the \u201cSCC<\/strong>\u201d) in October 2020.[7]<\/a><\/p>\n\n\n\n

      In May 2021, the trustee filed an application in Capital Steel\u2019s bankruptcy proceedings seeking an accounting from Chandos regarding the estimated completion costs and the value of outstanding warranty items.[8]<\/a> Chandos argued that the issue should be determined in the lien proceedings that were commenced by the November 2016 Consent Order, and the judge directed that the issue be heard by a Master in Chambers.[9]<\/a><\/p>\n\n\n\n

      In September 2021, the trustee filed an application in the lien proceedings seeking a declaration that the lien was valid and requesting payment of the funds held in court pursuant to the November 2016 Consent Order.[10]<\/a> Chandos brought a cross-application, seeking the return of some or all of the funds paid into court on the basis that the limitation period for commencing proceedings in connection with Capital Steel\u2019s lien had expired.[11]<\/a> The Master in Chambers held that the trustee\u2019s application was brought after the two-year limitation period had expired and dismissed the application.[12]<\/a> The trustee\u2019s appeal of the Master\u2019s decision was subsequently dismissed by the judge in chambers.[13]<\/a><\/p>\n\n\n\n

      The trustee then appealed the judge\u2019s decision to the ABCA, arguing, among other things, that the limitation period did not begin to run until at least the ABCA\u2019s decision in January 2019 and that, in any event, the \u201cAction\u201d initiated by the November 2016 Consent Order could qualify as a claim for a remedial order.[14]<\/a><\/p>\n\n\n\n

      Law<\/h2>\n\n\n\n

      The following details were central to the issues before the ABCA:<\/p>\n\n\n\n