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The Alberta Court of King's Bench (the "Court") recently considered the entitlement to funds paid into Court under section 15(4) of the Alberta Public Works Act, RSA 2000, c P-46(the "PWA"), a bespoke statute that governs public-sector projects such as the construction of public works and infrastructure (for an in depth analysis of the PWA, please see our previous blog post here).
In Alberta Social Housing Corporation v Dawson Wallace Construction Ltd., 2025 ABKB 124("Dawson Wallace")1 the Court once again affirmed that sub-subcontractors do not have a right to funds paid into Court under section 15(4) of the PWA.Contractors, subcontractors, and sub-subcontractors alike are reminded of the need to be aware of their rights under the PWA and should be cautious to ensure that they are taking appropriate steps to protect (or enforce) their interests (or rights) both inside and outside of the PWA.
Key Takeaways:
- The Court has upheld a line of previous decisions confirming that the only person entitled to contract monies paid into Court under the PWA is the contractor, or its assignee or persons claiming through it. Accordingly, the PWA does not create any rights to compensation or payment for sub-subcontractors, so much as it sets out an administrative procedure for establishing priority claims.
- Although the PWA does not explicitly provide rights of recovery for sub-subcontractors, in practice, sub-subcontractors can still file claims under the PWA. Contractors should be aware of the significant financial risk and potential delay associated with PWA claims being filed, and take steps to ensure that payments are made promptly, bonds, where appropriate, are in place, and high standards of overall project and contract management are maintained.
- Finally, Dawson Wallace is a helpful practice reminder of the importance and care that should be given to drafting and agreeing to Consent Orders. Swaying the opinion of the Court is a difficult enough task when you are not arguing against an Order that you previously endorsed.
Background
The Alberta Social Housing Corporation ("ASHC") hired Dawson Wallace ("DW") to be the general contractor for a public project in Calgary. In order to fulfill its obligations, DW further subcontracted with D'Amani Stucco Solutions Inc. ("D'Amani") who, in turn, sub-subcontracted with EKO Wall Systems ("EKO") and Adexmat respectively.
D'Amani eventually abandoned their contract with DW and went bankrupt shortly thereafter.
EKO and Adexmat brought claims under the PWA for around $300,000.00 representing amounts owed by D'Amani for work under their sub-subcontracts with D'Amani.
Per the PWA, when faced with a claim, the Crown has the option of paying the claims out under section 15(1), or paying the money into Court under section 15(4):2
15(1) Thirty days after giving notice in writing to the contractor and surety, the Crown may pay the claimant the amount the Crown considers proper and deduct the amount so paid from any money due and payable to the contractor on any account or from the money or security, if any, deposited by the contractor with the Crown.
[...]
(4) Instead of paying the claimant as provided in this section, the Crown may apply to the Court to pay the money into Court on the terms and conditions, if any, determined by the Court and, on the money being paid into Court, the Court may determine the persons who are entitled to the money and direct payment of the money in accordance with that determination.
In this situation, the ASHC elected to pay monies into Court under section 15(4) of the PWA. As part of that process, all parties entered a Consent Order which stated that the monies were "due and owing to Dawson Wallace pursuant to a contract with [ASHC]" and that EKO and Adexmat had brought claims under the PWA for amounts owed to them by D'Amani.3
Upon hearing a subsequent application to distribute the monies held in Court, W.S. Schlosser J. held that the record before the Court was inadequate to determine an appropriate payout of the funds and so the applications were dismissed for lacking evidence.4
Alberta Social Housing Corporation v Dawson Wallace Construction Ltd., 2025 ABKB 124.
On appeal, DW relied on Alberta v Opron Construction Co., 1985 CanLII 1211 ("Opron") and Alberta Government Telephones v Canada Great Lakes Casualty & Surety Co., 1985 ABCA 111 ("AGT"), arguing that a creditor (or subcontractor) of a contractor can only bring a claim under the PWA through that contractor.5
Conversely, EKO and Adexmat relied on Graham Construction and Engineering Inc v Alberta (Infrastructure), 2021 ABQB 184 ("Graham")6 and Moonview Builders Ltd. v Alberta Housing Corporation, 1983 CanLII 1009 (AB KB)("Moonview").7 In Moonview, the Court awarded monies paid into Court under section 15(4) of the PWA to sub-subcontractors in the context of workmen wage claims. In Graham, the Court disqualified the defaulting contractor from claiming under the PWA for non-compliance with notice requirements8 of the PWA and paid out monies, in accordance with the Consent Order, to all "PWA claimants" – crediting the PWA security against any amounts owing to Graham by the Crown but acknowledging that Graham was not a PWA claimant.9
In overturning the Application Judge's ruling, the Dawson Wallace Court distinguished the facts in issue from Graham and found that Moonview - being another Alberta Court of King's Bench decision - was not binding on the Court and appeared to be in irreconcilable conflict with the Alberta Court of Appeal's decision in AGT.10
Graham was distinguishable due to the specific wording of the Consent Order through which the funds were paid into court, which directed that the monies were payable to "PWA claimants", to which, Graham was not one for failing to abide by the Act's notice requirements. Graham's entitlement was specifically contemplated in the Consent Order by recognition that any amounts paid by the Court to PWA claimants would be credited against the debt owed by the Crown to Graham – the amounts were paid out through Graham's privity of contract with the Crown and Graham was deemed, by the Consent Order, to have received the benefit of those monies. Justice Michalyshyn noted that the ruling in Graham recognizing entitlement for sub-subcontractors should be limited to the specific facts (specifically, the wording of the Consent Order) of that case.11
After noting the important factual differences, the Dawson Wallace Court then relied on AGT for the proposition that the only party entitled to contract monies under the PWA is the contractor (who has the privity of contract) or its assignee or persons claiming through it.12 The Graham and Moonview decisions did not consider AGT and could not be reconciled with its central proposition. Given that the Alberta Court of Appeal's decision in AGT was binding on the Court, Justice Michalyshyn was compelled to follow it.
The Court also gave considerable attention to the language of the Consent Order and the fact that it recognized DW's entitlement to the monies while excluding any mention of a direct claim against DW or the Crown for those amounts in respect of the sub-subcontractors. Absent directions to the contrary, like those provided in the Graham Consent Order which acknowledged payment to PWA claimants as a credit for the Crown's debt to Graham, the Court continues to determine entitlement to PWA claims on the basis of existing contractual relationships.
PWA Sections 15(1) and (4) do not create statutory rights
A point of potential confusion when considering the Dawson Wallace decision in light of Graham is that sub-subcontractors might now appear to have their ability to claim depend on the language of a Consent Order drafted in their favor. While this line of reasoning has some persuasive value, it is inconsistent with the Court's clear guidance in Dawson Wallace and AGT that sections 15(1) and (4) of the PWA do not create any rights. As stated in the AGT decision:13
6 The court's responsibility, acting under subs. (4), is to determine who is entitled to the moneys. Apart from subs. (1) the only person "entitled" to the contract moneys is the contractor (or its assignee or persons claiming through it). Subsection (1) is discretionary and creates no rights.
[...]
8 ...To say that s. 15(1) goes beyond establishing a mere discretionary power in the Crown and creates an entitlement in proceedings under s. 15(4), creates difficulty... [emphasis added]
As further explained by W. S. Schlosser A.J.:
21 ... For someone to become a PWA claimant, the Act only requires that notice be sent by someone supplying labour and materials on a public work (by registered mail), within 45 days of the last provision of labour or materials; setting out the nature and amount of the claim (s 14(3)). The Act does not provide any built-in evaluation mechanism other than by payment in under s 15(4) order and for the Court then to determine entitlement as permitted by the order. The Crown has the option and discretion to pay s 14 claimants directly under s 15(1), but the Act does not otherwise create any rights.
22 The starting point for payment in under the Public Works Act has to be that the Crown (at least arguably) owes money to the general contractor on the project. The PWA does not establish rights against the Crown in the way that the Builders Lien Act does against an owner...14 [emphasis added]
The language of the PWA and the options presented to the Crown under section 15 recognize the absence of a definable right for a sub-subcontractor to make claims against the Crown. The Crown, through its discretion under section 15(1),15 may choose to pay any PWA claimant in whatever amount the Crown determines, whether that party is a contractor, subcontractor, or sub-subcontractor. Apart from being eligible to be considered for payment under section 15(1), the PWA makes no affirmative statements to establish a right to monies under the PWA on behalf of a sub-contractor or sub-subcontractor.
The Court, in turn, is much more restricted under section 15(4) and must consider the terms and conditions upon which the monies are paid into Court when determining how they will be paid out. Where the Crown is granted broad discretion, the Court is instead grounded in determining the question of who is entitled to the monies.
In addressing the question of entitlement under section 15(4), the Court in Dawson Wallace has added yet another decision to the line of cases which confirm that sub-subcontractors are not eligible claimants to the monies (or other security) in Court under sections 14 and 15 of the PWA:16
[T]he Crown could exercise its prerogative under s. 15(1),(2)&(3) to pay any such claimant and deduct the same from amounts owing to the contractor. However, where the Crown does not exercise that prerogative and the Contractor has a contractual entitlement to the monies in Court, as in the case at bar, only subcontractors that claim through the contractor can claim an entitlement to the monies in Court for the reasons set out fully in Opron and AGT. [emphasis added]
And as further articulated by Master Funduk's decision in Opron:17
Right thinking persons would find it offensive that an asset of A is available to the creditors of B to satisfy the debts owed by B.
This is an important distinction for parties to be aware of as, in practice, the Crown tends to pay monies into Court under section 15(4) and rarely (if ever) exercises the discretionary powers of section 15(1).
The Disconnect Between Entitlement and the Ability to Claim under the PWA
Regardless of the Court's clear endorsement that sub-subcontractors continue to have no rights to the monies (or other security) in Court under the PWA, construction projects remain at risk of lengthy and expensive delays when a claim is brought by a sub-subcontractor in any event.
As the Applications Judge in Dawson Wallace pointed out:18
For someone to become a PWA claimant, the Act only requires that notice be sent by someone supplying labour and materials on a public work (by registered mail), within 45 days of the last provision of labour or materials; setting out the nature and amount of the claim (s 14(3)).
The Dawson Wallace decision, demonstrates the risks and expense of leaving statutory claims processes open for parties to commence claims despite those parties not having recovery rights. To combat against the risk of expensive litigation and lengthy delay, contractors should ensure that they are making prompt payment on invoices, requiring and relying on bonding where appropriate, and that high standards of overall project and contract management are maintained.
Consent Order Considerations
While it may appear that Dawson Wallace contrasts the ruling in Graham that recognized an ability to claim under the PWA for sub-subcontractors, it is perhaps more appropriate to recognize both decisions as a function of the Crown's discretion when paying monies into Court and a reminder of the importance and attention that should be given when drafting, or agreeing to, Consent Orders. When dealing with Consent Orders under the PWA, all parties should be aware of the weight of the "terms and conditions" for paying monies into Court contemplated in section 15(4) – particularly when getting the monies back out as efficiently as possible is a priority.19
For example, in Dawson Wallace, the issue of entitlement was not open for the Court to determine given that the Consent Order clearly recognized the amounts as "due and payable" to DW under the contract.20 The Dawson Wallace Consent Order also stated that EKO and Adexmat were claiming amounts potentially owed to them by D'Amani – not by DW or the Crown.21 As such, the parties entered an Order into Court that established: (i) the monies are DW's; and (ii) the sub-subcontractors had no claim against either DW or the Crown.
In contrast, the Graham Consent Order recognized potential sub-subcontractor entitlement by providing that the monies would be paid out to unnamed claimants in respect of amounts owed by the Crown to the Contractor.22 The Graham Consent Order connected the claims – the amounts were paid out through Graham's contractual entitlement and in response to Graham's default under the contract.
The weight afforded to the Consent Order in Dawson Wallace should also be considered in light of recent appellate guidance in Chandos Constructions Ltd. v Deloitte Restructuring Inc., 2024 ABCA 403 ("Chandos").23 There, the Alberta Court of Appeal considered the status of Consent Orders under Alberta's Prompt Payment and Construction Lien Act, RSA 2000, c B-7 – a distinct but related piece of Alberta construction legislation discussed at length here.24 In Chandos, the Alberta Court of Appeal reiterated that a Consent Order is an Order of the Court itself and not simply a contract between parties.
When parties to litigation put forward a Consent Order they are not merely agreeing to the contents of the Order, but rather, they are asking the Court to adopt the language of the Order as its own and to give it binding legal effect. Regardless of frequency or brevity, this is a process that must be done with caution, diligence, and foresight – increasingly so when dealing with a statute that is largely silent as to procedure such as the PWA.
Final Takeaway
The PWA is a unique piece of legislation that governs complex and technically challenging public construction projects. Navigating both the PWA broadly, and the claims that may be brought under it, are a complex undertaking. For assistance with managing the PWA claim process, protecting your best interests, and maximizing your entitlements please contact the experienced Project Disputes team at McCarthy Tétrault LLP.
Footnotes
1 Alberta Social Housing Corporation v Dawson Wallace Construction Ltd., 2025 ABKB 124 [Dawson Wallace, 2025 ABKB 124].
2 Public Works Act, RSA 2000, c P-46, s.15 (1) and (4).
3 Dawson Wallace, 2025 ABKB 124 at para. 3.
4 Alberta Social Housing Corporation v Dawson Wallace Construction Ltd., 2023 ABKB 471 at para. 41 [Dawson Wallace, 2023 ABKB 471].
5 Dawson Wallace, 2025 ABKB 124 at paras. 8-12.
6 Graham Construction and Engineering Inc v Alberta (Infrastructure), 2021 ABQB 184[Graham].
7 Moonview Builders Ltd. v Alberta Housing Corporation, 1983 CanLII 1009 (AB KB) [Moonview].
8 Public Works Act, RSA 2000, c P-46, s. 14(3).
9 Dawson Wallace, 2023 ABKB 471 at paras. 17-19
10 Dawson Wallace, 2025 ABKB 124 at para. 31.
11 Dawson Wallace, 2023 ABKB 471 at para. 18; Dawson Wallace, 2025 ABKB 124 at para. 23.
12 Ibid at para. 35.
13 Alberta Government Telephones v Canada Great Lakes Casualty & Surety Co., 1985 ABCA 111at paras. 6 and 8 [AGT]; also endorsed in Opron at paras. 7 and 9.
14 Dawson Wallace, 2023 ABKB 471 at paras. 21-22.
15 Public Works Act, RSA 2000, c P-46, s.15(1).
16 Dawson Wallace, 2025 ABKB 124 at para. 33.
17 Alberta v Opron Construction Co., 1985 CanLII 1211 at para. 46 [Opron].
18 Dawson Wallace, 2023 ABKB 471at para. 21.
19 Public Works Act, RSA 2000, c P-46, s.15(4).
20 Dawson Wallace, 2025 ABKB 124 at para. 3.
21 Ibid at para. 3.
22 Ibid at para. 22.
23 Chandos Constructions Ltd. v Deloitte Restructuring Inc., 2024 ABCA 403 at footnote 4 [Chandos].
24 Prompt Payment and Construction Lien Act, RSA 2000, c B-7.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
