In the recent Alberta Court of Kings Bench decision, Alberta Social Housing Corporation v Dawson Wallace Construction Ltd., 2025 ABKB 124, the Court held that sub-subcontractors are not entitled to be paid from funds paid into Court by the Crown under the Public Works Act, R.S.A 2000 c. P-46 (PWA).

Alberta Social Housing Corporation (ASHC) retained Dawson Wallace (Dawson) as general contractor to construct a social housing project as a public work. Dawson’s stucco subcontractor retained two sub-subcontractors. After the stucco subcontractor went bankrupt, the unpaid sub-subcontractors submitted PWA claims. The Crown withheld the value of their claims from Dawson and paid the amount withheld into Court under section 15(4) of the PWA. In a Court application to determine entitlement to those funds, the applications judge held there was too little evidence to determine which claimant was owed the monies. All parties appealed that decision.

On appeal, the judge held that the sub-subcontractors had no right to claim the monies in court, even though they were PWA claimants. This surprising result returns the Court to the state of law in 1985: that only persons claiming through the contractor (that is, assignees of the contractor or parties directly contracting with the contractor) can claim monies in court.

This reasoning raises several interpretive concerns.

Inconsistency between S.15(1)(2)(5) and (4) of the PWA

Under the PWA definitions, a “claimant” includes a contractor or “subcontractor” who gives a compliant notice, and a “subcontractor” includes sub-subcontractors. Sub-subcontractors can thus give notices of claim. Sections 15(1) and (2) allow the Crown or the surety, respectively, to pay a claimant – again, including sub-subcontractors. Section 15 (5) says that such PWA claimants have priority to those monies over claimants under other legislation.

The appeal judge in Dawson Wallace impliedly held that as soon as the monies are instead paid into Court under section 15(4), sub-subcontractor claimants no longer have enforceable claims under the PWA. The Court cannot pay them from the monies in Court, and nor does the priority granted by section 15(5) seem to apply. How can sub-subcontractors be claimants under sections 15(1), (2), and (5) but entitled to nothing under sub-section (4)?

One way to rationalize different treatment of sub-subcontractor claimants under sections 15(1) and (2) and under section 15(4) is to infer that while the former sections pay “claimants,” the latter section pays “persons who are entitled to the money.” Sub-subcontractors, it follows, are “claimants” but not “persons entitled to the money.” This leads to the unlikely conclusion that the broad word “person” is somehow narrower than the definition of “claimant.”

The other way to rationalize different treatment of sub-subcontractor claimants under sections 15(1) and (2) and under section 15(4) is to infer that sub-subcontractors are simply not persons “entitled to the money.” But Dawson Wallace finds that sub-subcontractors are not “entitled to the money” because they are not entitled to the money; the logic is tautologous. 

Mis-reading of AGT decision

The appeal judge held that the Court ought to follow the Court’s earlier decision Alberta Government Telephones v. Canadian Great Lakes Casualty and Surety Company Ltd., 1985 ABCA 111 (AGT), which held that “...the only person ‘entitled’ to the contract monies is the contractor (or its assignee or persons claiming through it).”

The AGT decision was not about sub-subcontractors under one contract. It was about claimants under other contracts of the contractor: AGT held that claimants under two contracts under which there were insufficient funds to pay the claims could not share in the monies of the third contract under which there was a surplus of funds.

It was in that context that AGT held that “the only person ‘entitled’ to the contract monies is the contractor,” and not the claimants under other contracts.

When the appeal judge cited AGT in Dawson Wallace, he omitted the first part of the sentence: “Apart from subsection (1), the only person ‘entitled’ to the contract monies is the contractor…”  Subsection (1) permits the Crown to pay a “claimant,” including a sub-subcontractor. Thus, AGT recognized that the persons potentially entitled to the monies could include “claimants.”

Precedence issue

The appeal judge in Dawson Wallace acknowledged two contrary decisions – Moonview (1983) and Graham (2021) –both of which awarded monies paid into Court to sub-subcontractors. 

The appeal judge in Dawson Wallace held the Alberta Court of Appeal’s decision in AGT took precedence over the King’s Bench’s decisions in Graham and Moonview. But the appeal judge did not consider Lawrence Customs Brokers (1970) Ltd. v. Alberta, 1985 ABCA 200 (Lawrence), a later decision of the Alberta Court of Appeal which awarded monies in Court to a sub-subcontractor claiming under the PWA. 

Consent order issue

The appeal judge also distinguished Graham partly because of differences in the Consent Orders paying the monies into Court. In Dawson Wallace, the preamble of the Consent Order stated that the monies were “due and owing to Dawson Wallace.” To the contrary, the Consent Order in Graham did not specify the monies in Court were due and owing to the contractor, Graham, nor that any amount of money was due and owing to the contractor.

Troublingly, this distinction implies that the wording of the Consent Order paying monies into Court will affect sub-subcontractors’ potential statutory rights. Would the sub-subcontractors in Dawson Wallace have had rights to the monies had the Consent Order said the monies were “in dispute” rather than the monies were “due and owing” to the contractor? Surely, statutory rights do not rise or fall on these types of technicalities.

Resolving the competing priorities

If the monies can be paid either to sub-subcontractor claimants s or to contractor claimants, who is the Court to pay? In Dawson Wallace, the answer should have been straightforward: the sub-subcontractors were claimants; the contractor was not as it had not submitted a PWA claim. Therefore, assuming that the sub-subcontractors’ claims were valid, they had priority over the monies paid into Court pursuant to section 15(5).

Difficulties will arise where both the contractor and sub-subcontractors issue PWA claims. In that case, both have priority under section 15(5). Of the two, who gets the money? The Courts would clearly benefit from greater instruction from the legislation.

Where are we now?

  • According to Dawson Wallace, sub-subcontractor claimants are not entitled to share in monies paid into Court by the Crown under Section 15(4).
  • Sub-subcontractor claimants thus have every incentive to seek payment by the Crown under section 15(1), before monies are paid into Court.
  • Parties and their counsel consenting to pay monies into Court under Section 15(4) should closely consider the specific wording under the Consent Order, especially whether the Consent Order says the monies to be paid into Court are “in dispute” or are “due and owing to the contractor.”
  • Unpaid sub-subcontractors should rely on the broad form Labour and Material Payment bonds often required by the Crown to be provided by a contractor working on a Public Works project, as this type of bond expressly includes sub-subcontractors as claimants.
  • The legislation is not clear and Court interpretation of the legislation is inconsistent and requires further clarification.

This decision interprets Alberta’s Public Works Act, which governs public construction contracts in the province. Similar legislation in other jurisdictions may differ significantly in scope and application.

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