23 minute read
The Missing Middle – A millennial’s perspective
The Missing Middle –
A millennial’s perspective
In spring 2017, the Vancouver Board of Trade held its 2017 Housing Forum on the Missing Middle . As someone who is part of a key demographic this crisis affects, I was ready to hear some recommendations . The message heard loud and clear at this seminar, as well as at the multitude of others this year, is that we “have to adapt our expectations .” A hard pill to swallow as someone who is now on the cusp of the age at which I ‘should be’ investing in my forever home .
My story is like many of my peers’: I was born to immigrant parents and raised here in Vancouver . My parents’ lives followed the typical synopsis of what an ideal plot should look like: be educated, get married, have kids and buy a house . This is the same narrative I, and many others of my generation, have been raised to believe is the most secure way to live our lives .
To purchase a property is an investment in our future as much as a measure of success . It has become our expectation of our life’s trajectory . We want to ‘make it’ and be seen as making it by others; personal accomplishment, image and status matter to millennials . 1
So, what do we do now that this is no longer a viable reality for us if we choose to live in Vancouver? We are suddenly finding ourselves being none so gently coaxed to fundamentally change our expectations about how we intend to live – how we live together in our community, how high and how big we live, and where we live . This is the single loudest message coming from industry experts, and it is such a jarring reality check; one that I often feel unprepared for .
In speaking to many of my friends, they too are unprepared, and in fact, still in the denial phase of grief . In these early days of a housing paradigm shift in Vancouver, many of us still reject the notion that we may never be able to live in Vancouver proper . Certainly not when the city ranks number 15 out of 17 cities in terms of affordability and economic competitiveness – a solid D grade that puts it below Toronto, Los Angeles and Sydney .
2
What is the recommendation then? First, we have to begin to believe and internalize that the currently missing middle housing, duplexes, townhouses, live/work spaces, can also be a home . According to a survey released by Vancity in May 2016, most millennials who buy a home in Metro Vancouver will go deeper into debt every year . 3 The report states that millennial couples who buy condos are better off, acquiring a relatively healthy disposable income each year rather than being in the red with a detached home .
There is a plethora of old adages that I can quote to back up the sentiment that a house is simply that, a house – a thing that we make into a home . It is where we live, raise families, renovate kitchens and store our high school yearbooks . It can be a laneway house, a low rise, or an Airstream; we need to move beyond boxing our notions of a house into the typical single detached, excessively largeyarded home .
Second, and perhaps the hardest to accept, Vancouver living may not be in our future . This pattern is already beginning to manifest itself, with millennials choosing municipalities such as Whistler, Fort St . John and Victoria to call home . 4 Though we want the so called ‘happy ending’ of a sprawling detached single-family home in Kitsilano, through our own deliberate but unsure choices we may end up in the alternative ending of owning a courtyard apartment in Port Moody .
This is not the depressing ending that many of us feel it may be, in fact, quite the opposite . A Stats Canada study on the average life satisfaction across census metropolitan areas from 2009 to 2013 saw that Vancouver ranked dead last, losing out heavily to cities like Kelowna and Abbotsford . 5 Books such as Happy City by Charles Montgomery have long touted the negative effects modern cities have on general health and wellbeing and call for a radical change in the way we view urbanism and design .
We must now embrace disrupting the traditional markers of adulthood and perhaps eschew a more ‘traditional’ path in life . And are not millennials the best suited for this? We are the most educated and culturally diverse generation yet . 6
We pursue originality while simultaneously cultivating community . Housing for us may be missing at the moment, but no doubt millennials will drive the change necessary to adapt and thrive – even if that is in regions beyond Vancouver .
Sources
1 Doug Norris . Millennials: The Newest,
Biggest and Most Diverse Target
Market. Page 14, Environics Analytics . 2 Greater Vancouver Board of
Trade . Unlocking Supply: Housing
Affordability and the Missing Middle. 3 Vancity Credit Union . No Funds City:
Why Vancouver millennials have the lowest discretionary income in Canada. 4 Doug Norris . Millennials: The Newest,
Biggest and Most Diverse Target
Market. Page 15, Environics Analytics 5 Lu, Chaohui, Grant Schellenberg,
Feng Houand John F . Helliwell .
How’s Life in the City? Life
Satisfaction Across Census
Metropolitan Areas and Economic
Regions in Canada. Statistics Canada, 20 April 2015 . 6 Doug Norris . Millennials: The Newest,
Biggest and Most Diverse Target Market.
Page 44, Environics Analytics .
About the author
Jasmin Bhandal, Corporate Strategy Analyst at ConEcon Consultants
Eagerly creative and passionate for out of the box thinking, Jasmin brings her experience as a Brand Planner and Strategist to spearhead ConEcon’s corporate-level strategic and business development initiatives . With a background in strategy implementation for an array of industries including education, clean tech and CSR, Jasmin creatively translates business problems into precise and practical solutions . Having completed her Bachelors of Business Administration from the Beedie School of Business, SFU, Jasmin has since gone on to educate herself in Strategy Planning and Design from UBC .
(Newfoundland and Labrador)
Striving toward the PQS designation
Iwould like to thank the Editor of Construction Economist, Arif Ghaffur, for the opportunity to tell you about my journey towards becoming a Professional
Quantity Surveyor .
It was about two years ago that I became involved with the CIQS and it became apparent to me that my previous work experience would be beneficial as I pursued the PQS designation .
Having graduated from University with a BBA with a Finance concentration and an Economics minor, I pursued a career in property management where I held the position of operation manager for 15 years .
During my career, I was looking for new opportunities . Exposure to the Quantity
Surveying profession has provided me with a tremendous platform where my academic and work experience will be augmented with an expanded skill-set and a fresh perspective .
I had always felt the need for new challenges and, while I had enjoyed my career in property management, I decided it was time for a change . Whilst the planning and strategic part of operations had always appealed to me, the daily aspects of redeveloping an older property within an evolving city were becoming less rewarding .
My employer company managed a 1890s, 60,000 SF property, (containing retailers, offices, several art galleries, many art studios, and storage), that had undergone many renovations .
Whilst my role in operational management kept me engaged in key aspects of leadership, I am now adopting many of the skills becoming of a Professional Quantity Surveyor . I am
further advancing my software skills, specifically developing spreadsheets that encompass the PQS method and working towards a better understanding of the functioning of BIM . My approach is now more structured and concise .
With this expanded knowledge, I am contributing to the business in a more value driven manner and, in parallel, accumulating diary hours to comply with the Test of Professional Experience (TPE) requirement of becoming a Professional Quantity Surveyor .
My development as a professional has driven me to actively look for work and challenges that will broaden my experience and expand my network within the property, construction and engineering industries . It is indeed an interesting time in my professional career .
By becoming a Professional Quantity Surveyor, the opportunity of establishing my own practice becomes a reality . Furthermore, the PQS designation will enable me to successfully utilize my financial training and accounting experience in a manner beneficial to my chosen profession .
The knowledge I gained in preparation for my PQS exams was a great opportunity to learn how construction operates from the ground up and in a manner that has been structured and aimed at expanding my horizons as I strive to work on many more varied projects in the future . For example, I am particularly interested in the development of Project Monitoring .
With over 20 years of involvement in commercial real estate, I have noticed a tremendous transformation that I believe will accelerate and provide excellent opportunities for Professional Quantity Surveyors .
Globally, real estate and infrastructure have developed into an asset class that is here to stay, certainly for as long as bond yields remain low . This will heighten the need for increased transparency and will create opportunity for Professional Quantity Surveyors as they have the skills to estimate, monitor, control and report costs .
In parallel, cities are becoming more concerned with density as they contend with providing increased services with lesser budgets . Finding creative and cost-effective solutions is becoming increasingly important – in my opinion, Professional Quantity Surveyors are well positioned to be part of these solutions .
I look forward to continuing my effort to achieve my PQS designation and am very appreciative of the continuing support I have received from family and friends, as well as current members of the CIQS . It is a testing time for our profession and I very much look forward to being a part of the success story!
Builders’ liens vs. bankruptcy:
Appeal Court untangles the priorities
Emilio Bisceglia
onstruction projects give rise to many risks at the best of times, for the owner, for the general contractor and for the subcontractors . Provincial law in the form of builders’ lien legislation is designed to manage some of those risks, and protect some of the stakeholders . But when one of the involved parties becomes insolvent, it becomes a supervening event that can give rise to unique and complex issues as to how (and whether) the other parties in the chain of contractors and subcontractors will get paid for their work .
The decision in Iona Contractors Ltd. (Receiver of) v. Guarantee Co. of North America1 – which the Supreme Court of Canada has recently refused to consider on appeal2 – gave the Alberta Court of Appeal the unique opportunity to clarify the law on the interplay between the provincial law on statutory trusts that arise under builders’ lien legislation, and the federal law relating to insolvency .
The underlying law
To fully appreciate the outcome of Iona, it is important to first lay the groundwork as to the legal context in which it arises .
In virtually any construction project, there are many parties who contribute to improving the land, including contractors and subcontractors, and there are just as many opportunities for disputes to arise among them . Although the wording may differ slightly from province to province, each common-law jurisdiction in Canada has passed builders’ lien legislation which exists to protect the payment of these parties, by creating a statutory ‘trust’ over the funds in the right circumstances . Using subcontractors and suppliers as an example, the effect of the legislation is that monies paid or received by a contractor on account of construction-related work done by subcontractors and suppliers are impressed with a legal trust for the benefit of those latter parties .
Things become suddenly more complicated if the contractor becomes insolvent along the way, because it raises the key question of how the provisions of the federal Bankruptcy and Insolvency Act3 (the “BIA”) affect the trust that has been statutorily created under that provincial lien legislation . In particular, section 67(1)(a) of that federal legislation expressly provides that property held in “trust” by a bankrupt for another person does not form part of the bankrupt’s estate for the purposes of distribution .
The interplay between the provincial builders’ lien legislation establishing a trust, and the federal insolvency law provisions excluding money held in trust, was the precise narrow question addressed by the Alberta Court of Appeal in Iona .
The Iona Scenario
The facts in Iona were not unduly complex . At its core, it involved a contest between two competing parties, each of whom claimed entitlement to about $998,000 in holdback funds that had not been paid to a then-bankrupt general contractor, and which were still in the hands of the owner of a construction project .
That owner was the Calgary Airport Authority (the “Airport”), which contracted with the general contractor, Iona Contractors (“Iona”) to have it construct improvements to the airport . In order to guarantee that suppliers of the labour and materials for the project would be paid, the contract required Iona to deliver a Performance Bond and a Labour and Material Payment Bond (collectively, the “Bonds”) . The Bonds were issued by the Guarantee Company
Cof North America (“Guarantee”) which served as a surety . Iona proceeded to perform its obligations under the contract, but was struggling to stay solvent . By October of 2010, the work was substantially complete, but some of the subcontractors had not yet been paid . Having learned of this, the Airport withheld payment to Iona and instead used $183,000 of the money it would otherwise have paid Iona to complete the deficiencies in the work . This still left the Airport with almost $998,000 in holdback funds still in its hands (the “Holdback Funds”) . Two parties stepped forward to claim entitlement to those Holdback Funds: The first was Guarantee, which in the meantime had taken steps to compensate the still-unpaid subcontractors on the project . In the role of surety, it paid out $1 .48 million under the Payment Bond to settle their claims, and sought to recoup some of those payments from the $998,000 in Holdback Funds still being held by the Airport . The second was a Trustee in bankruptcy, which had been appointed after Iona finally declared insolvency in December 2010 . On behalf of the nowbankrupt Iona, the Trustee also staked a claim to the Holdback Funds which it sought to make part of Iona’s estate for distribution to various creditors . Thus, the dispute was between Guarantee as surety and the Trustee for entitlement to the Holdback Funds . The matter was initially heard by an Alberta lower court, which vindicated the Trustee . Guarantee then brought an appeal . 4
The arguments on appeal
In seeking to establish its claim, Guarantee’s main argument was that the Holdback Funds were subject to a ‘trust’ under the provincial Builders’
Lien Act5 (“BLA”), which excluded them from Iona’s distributable assets after bankruptcy . It asserted that the contract allowed the Airport the right to cure Iona’s breach by paying its unpaid subcontractors directly, which meant that Iona no longer had any claim to the Holdback Funds and that Guarantee should be entitled to them instead .
In contrast, the Trustee in Iona’s bankruptcy argued that since Iona’s work was substantially complete, and a certificate to that effect had been issued, Iona was still entitled to be paid by the owner Airport . More to the point, the Trustee claimed that if the leftover funds in the Airport’s hands were impressed with a statutory trust under section 22 of the BLA, this would operate to re-order or offend the priority regime for creditors under the bankruptcy legislation, and as such was not constitutionally valid and could not assist Guarantee in the circumstances .
The difference between an ‘Obligation’ and a ‘Right’ to pay unpaid subcontractors
In unravelling the parties’ competing claims, the majority of the Court of Appeal considered the contractbased argument first, which involved determining whether Iona was still owed money under the contract, or whether that obligation had been eliminated by the Airport’s direct payment to subcontractors, essentially on Iona’s behalf .
The Court of Appeal noted that the question was not whether the Airport had a contractual ‘obligation’ to pay the subcontractors, but rather whether under the wording of the main contract with Iona it had the discretion or the ‘right’ to do so, which in this case the Court found it did . However, even if the Airport was ‘allowed’ to pay the subcontractors under its contract with Iona, the Court observed that the contractual provisions became inoperative once Iona went bankrupt, since the BIA takes over at that point to govern the determination of creditors’ priorities .
The Court of Appeal thus disagreed that Iona had no money owing to it under the contract, as Guarantee had asserted .
Whether holdback funds held in ‘Trust’
However, this still left the BLA trust argument, and required the Court to consider how the funds originally owed to Iona were to be treated under the provincial lien legislation in the circumstances . The specific question for the Appeal Court was whether the Holdback Funds in the hands of the Airport were funds held in ‘trust’ for the unpaid subcontractors, within the meaning of section 22 of the BLA . If so, Guarantee claimed that having paid the subcontractors directly, it was now subrogated to their position .
The Court examined the overall provisions of the BLA, which it concluded creates a “comprehensive, integrated system that provides some assurance to subcontractors that they will get paid for improving land . ” Part of that comprehensive regime is section 22, which sets up a statutory trust over payments that have been received by a party in relation to work provided or materials furnished by another person, where that payment has been made by the owner after a certificate of substantial performance has been issued . The section effectively uses the trust mechanism to avoid holdback funds from being diverted after the certificate of substantial completion has been issued, and ensures that when remaining funds are being paid out, they end up in the hands of any unpaid subcontractors .
With the overall legislative regime in mind, the Court held that a trust could indeed arise under section 22 even in these relatively unique circumstances . Even when viewed from a commonlaw perspective, such a trust featured the necessary elements to make it legally valid . The Court then turned to the issue of how the existence of such a trust would interact with the priority scheme set out in the federal bankruptcy legislation .
The constitutional issue
In addressing the tension between the BLA and the federal Bankruptcy and Insolvency Act, the court had to first determine whether the trust provisions in section 22 of the BLA were in conflict with the BIA’s regime for establishing the priority of creditors’ claims to a bankrupt’s assets . If they were, then they could not assist Guarantee in claiming entitlement to the Holdback Funds here .
Under this examination, there are two competing principles: 1) the federal BIA must operate in the context of, and subject to, the general provincial property laws, including the law relating to trusts; and 2) the provincial BLA cannot contradict the federal BIAs priority regime, which remains paramount .
In contrast to the provincial BLA, which sets up a comprehensive regime to assure payment to stipulated parties after a certificate of substantial completion has been issued, the federal BIA governs the orderly distribution of the estates of bankrupt persons, and specifies the priority in which competing claims are to be paid . In the event of operational conflict between the BIA legislation and provincial law dealing with property and civil rights, the federal BIA must prevail .
This applies to the definition of what is a ‘trust’ for the purposes of distributing a bankrupt’s assets . Provincial law such as the BLA cannot purport to define what a ‘trust’ is for the purpose of the federal bankruptcy law . This ensures the uniformity of bankruptcy law across Canada . And although provincial legislation may validly affect priorities in a non-bankruptcy situation, once bankruptcy has occurred the provisions of the BIA determine the status and priority of certainly kinds of claims specifically brought under that legislation’s umbrella .
Nonetheless, the Appeal Court ruled that section 22 of the BLA was still valid since it did not does not reflect a deliberate attempt by the provincial legislature to change that, or to directly or indirectly re-order the priorities in bankruptcy; nor was there any operational conflict between it and the federal BIA .
The Court also pointed out that the trust mechanism did not purport to operate in an objectionably over-broad fashion, since it attached only to the discrete sum of money paid by the Airport after the certificate of substantial completion had been issued . The other assets of the Airport (as owner) and Iona (as contractor) were unaffected, and there was no attempt to “throw a general trust over all the assets” of the nowbankrupt Iona .
The Appeal Court accordingly held that the statutory trust mechanism set up by the BLA was constitutionally valid and enforceable, since it was a component of the provincial law that was not in operational conflict with the federal law .
The outcome
In the result, after considering the provisions of both pieces of legislation, the Court held that the disputed Holdback Funds in the Airport’s hands were impressed with a trust under section 22 of the BLA, and that they were not the property of Iona .
That trust essentially took precedence to the claims of Iona’s Trustee in bankruptcy in those same Holdback Funds, which were still intact, and were available to discharge the trust and pay the subcontractors . But since they had already been paid by Guarantee directly under one of the Bonds it issued, Guarantee became entitled to enforce all of the rights that the subcontractors would themselves have had under the BLA . 6 Guarantee was therefore entitled to the Holdback Funds .
Postscript
After receiving the unfavourable Alberta Court of Appeal ruling, the Trustee launched an appeal to the Supreme Court of Canada, asserting that issue of the correct legal interplay between the BLA trust provisions (and their equivalent in other provinces) and the provisions of the BIA were of national importance and involved resolving conflicting legal authorities on-point .
However, the Supreme Court of Canada denied the Trustee’s application for permission to appeal, evidently finding that the Alberta Court of Appeal’s reasons were persuasive and sufficient to guide the application of statutory trust provisions across the country .
What’s happened since Iona?
The Iona decision has been considered by only a handful of subsequent decisions since it was decided . For the most part, these have reflected
largely-unsuccessful attempts to expand and extrapolate the articulated principles into other unrelated areas in which a trust is set up, such as under condominium legislation,7 in relation to a Requirement to Pay by the Canada Revenue Agency,8 and in relation to dissimilar builders’ lien legislative provisions in other provinces . 9 Because none of the cases was directly on-point, the courts were positioned to distinguish the cases from Iona but there will likely be more opportunities for other courts to consider its impact in the future .
What does it all mean?
Although the Iona ruling dealt specifically with Alberta law as it relates to federal bankruptcy legislation – and to the extent that the wording of the builders’ lien legislation in other provinces is similar – it will likely apply with equal relevance outside that province as well .
The decision is important because it reflects the fact that for unpaid subcontractors and suppliers, and in cases where a contractor general contractor has become insolvent, the provisions of provincial lien legislation may provide an effective remedy for pursuing funds still owed under the contract . Especially where funds yet-unpaid to an insolvent contractor are sufficiently isolated in the hands of the owner, they may be impressed with a statutory trust and shielded from distribution to the insolvent contractor’s creditors in the normal course of a bankruptcy .
Of particular note arising from the scrutiny of the BLA regime is that the Appeal Court seems to conclude that a valid trust can be created even without a party deliberately or subjectively intending to, provided the party deals with property in a manner that falls within the provincial statute that creates such trusts .
The outcome in Iona will be comforting to contractors and subcontractors, but may be troubling for secured creditors who may be unknowingly advancing funds to a contractor on brink of insolvency .
Sources
1 2015 CarswellAlta 1286, 2015 ABCA 240 . 2 Ernst & Young Inc., in its capacities as Receiver and Manager, and Trustee in Bankruptcy of Iona Contractors Ltd. v. The Guarantee Company of North
America, 2016 CanLII 20441 (S .C .C .) . 3 R .S .C . 1985, c . B-3 . 4 2015 ABCA 240 5 R .S .A . 2000, c . B-7, s . 22 . 6 Note that one Alberta Court of Appeal judge disagreed, finding that the
Holdback Funds were payable not to Guarantee, but rather to Iona’s bankruptcy trustee, having found that the Builders’ Lien Act provisions were not constitutionally enforceable .
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