In Graham Construction and Engineering Inc v Alberta (Infrastructure), the Alberta Court of Queen’s Bench clarified that claimants must meet the prescribed notice requirements in order to have a valid claim under the Public Works Act (“AB PWA“).
The AB PWA is designed to protect persons that provided labour, equipment, material or services to a “public work”. A public work is a construction project commenced pursuant to a contract entered into with the Provincial Crown (i.e. the Provincial government) or an agent of the Crown.
On private projects, the Alberta Builders’ Lien Act protects unpaid subcontractors and workers by granting a builders’ lien on the land being improved. The Builders’ Lien Act does not bind the Provincial Crown. The Legislature determined that it would be against public policy to allow unpaid subcontractors to enforce builders’ liens against a public work. As an example, permitting enforcement of builders’ liens against public works could result in a hospital being sold to repay the unpaid subcontractors. Because of this, the AB PWA replaces use of the Builders’ Lien Act on public projects.
The AB PWA is a short statute that has infrequently been subject to judicial determination. In Graham Construction, the Court held that a claimant must comply with the notice of claim provisions described further below, to gain a priority right under the AB PWA. Merely filing an invoice is not sufficient to grant an upaid subcontractor a valid AB PWA claim. The Court held that a claimant cannot earn a second-ranking priority by “substantially” complying with the AB PWA.
This bulletin provides a brief overview of the AB PWA and similar legislation in other Provinces that create statutory remedies for work performed on public projects.
Public Works Act (Alberta)
When a person or public project is legally obliged to but fails to pay any person that has provided work or materials “used or reasonably required for use” on the public work, then the unpaid person may file a notice of claim with the relevant Minister or government agent. This notice of claim must be mailed within 45 days after the last day the work or materials were provided. For work on a highway or road, the claim must be submitted after 30 days but before 90 days after the last day the work or materials were provided.
After receipt of a claim, the Crown is required to give notice to the general contractor and its surety within 30 days. Then the Crown has broad discretion in how it responds to the claim:
- The Crown may either directly pay the claimant an amount that it considers proper and deduct such amount from amounts the Crown owes to the contractor with whom it has a contractual relationship; or
- The Crown may pay any amount it considers proper into Court. The Court then determines which claims will get paid out, in part or in full, from the amounts paid into Court.
If there are insufficient funds payable to the contractor to cover the PWA claims, then the Crown may seek recovery from the contractor’s surety. As confirmed in Graham Construction, a valid AB PWA claim grants a claimant priority to any monies payable under the same public works contract. This priority acts as a substitute for the builders’ lien interest in an improvement on a private project.
The case arose through a new hospital being constructed in Grande Prairie, Alberta, for which Graham Construction was the initial general contractor. After Graham Construction terminated its contract in 2018, a multitude of contractors had claims for money owed. In turn, some of the contractors filed AB PWA notices of claims seeking payment by the Government of Alberta. The Crown paid more than $30 million into Court pursuant to the AB PWA as a result of these claims.
Some contractors did not use the form required by the AB PWA, including Graham Construction. Graham had merely provided regular invoices to Alberta Infrastructure, albeit within the AB PWA’s time frame for a notice of claim. When Graham applied to distribute the funds being held in Court in 2019, including $3.5 million to Graham itself, other parties opposed the application based on non-compliance with the AB PWA. This argument was split off from the other settled claims that had already been paid out by consent, with roughly $8 million in claims outstanding. On appeal from Master Schlosser’s decision, the central issue was “whether or not the Master erred in holding that there are two different classes of claimants as defined by the [AB PWA] – those who ‘complied’ and those who ‘substantially complied’ with the notice requirements under s 14.”
In short, and as with builders’ liens, partial compliance is non-compliance. Only those who comply with the AB PWA obtain a priority and can access funds paid into Court. The key takeaways from Graham Construction are:
- Sections 14 and 15 must be followed by a party claiming recourse under the AB PWA
- Section 14(3)(b)’s notice in a “form satisfactory to the Crown” means the procedure under the AB PWA, including the Government’s standard form notice of claim, and not a mere invoice
- A party which fails to comply with the AB PWA still has its contractual rights as against the party that failed to pay, albeit without the AB PWA claim priority, however, pursuing these remedies may not be practical if the non-paying person is insolvent
- The Court retains no “overarching discretion under section 15(4)” to determine proper claimants
|Province/Territory||Legislation||Binds Crown?||Options for Recourse by an Owed Subcontractor|
|British Columbia||Builders Lien Act, SBC 1997, c 45||Partially|
|Saskatchewan||The Builders’ Lien Act, SS 1984-85-86, c B-7.1, as amended by The Builders’ Lien (Prompt Payment) Amendment Act, 2019, SS 2019, c 2||Yes||
|Manitoba||The Public Works Act, RSM 1987, c P300||No|
|Ontario||Construction Act, RSO 1990, c C.30||Yes||
|Québec||Pilot project to facilitate payment to enterprises that are parties to public construction work contracts and related public subcontracts, CQLR C-65.1, r 8.01 (pursuant to Act respecting contracting by public bodies, CQLR c C-65.1, s 24.3)||Yes|
|Nova Scotia||Builders’ Lien Act, RSNS 1989, c 277, as amended by An Act to Amend Chapter 277 of the Revised Statutes, 1989, the Builders’ Lien Act, SNS 2019, c 12||Yes||
|New Brunswick||Crown Construction Contracts Act, RSNB 2014, c 105||Yes|
|Prince Edward Island||Mechanics’ Lien Act, RSPEI 1988, c M-4||Yes|