Starke Capital: Plaza 14's condo corporation asks to be paid ahead of ATB

Plaza 14, a mixed residential and commercial condominium on the corner of 14th Street and 8th Avenue NW near downtown Calgary, went up in 1980; its commercial component covers two storeys and approximately 45,257 square feet. The two sides generally ran independently, BDO Canada Limited reports as receiver, but shared the costs of the building's common components, approximately 46.9% to the commercial side and 53.1% to the residential, per the Second Report of the Receiver, Sept. 21, 2026, paras. 11–12. The commercial component is one title, Unit 28. Under the bylaws it pays no monthly contributions; its owner instead pays the expenses of the commercial space itself plus 46.9% of the upkeep of the common property and of the annual insurance, and the other 53.1% belongs to 27 residential owners, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 3–6.

The last time the commercial unit's owner, 1637102 Alberta Ltd., had a zero balance with the condominium corporation was December 2021. Over the next two years the corporation invoiced it for its share of the insurance and of "essential post-tension work completed by contractors," and while the company "did make small periodic payments," by November 2023 it owed approximately $165,000, according to the Affidavit of the condominium corporation's property manager, Sept. 16, 2026, paras. 6–7. The unit has since been sold in a receivership, and Condominium Corporation No. 8111330, which styles itself Plaza 14, asks the Court of King's Bench of Alberta to declare that it ranks ahead of ATB Financial on the proceeds and to order the receiver to pay it $239,717.62, "or such other amount as is found to be owing," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, para. 58.

ATB obtained the receivership on January 18, 2024, from Justice R.A. Neufeld, who appointed BDO receiver of all the property of Starke Capital Corp. and 1637102 Alberta Ltd. under s. 243(1) of the Bankruptcy and Insolvency Act and s. 13(2) of the Judicature Act, in file 2401-00363 at Calgary, per the Receivership Order, Jan. 18, 2024, para. 2. The corporation's application is set before Justice C.D. Simard on the Commercial Duty List at 2:00 p.m. on October 2, 2026, the hour at which BDO also asks the court to approve its fees, direct a final distribution and discharge it, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, p. 1 and the Application (Discharge of Receiver), Sept. 21, 2026, p. 1 and para. 1.

A foreclosure, stayed

The corporation had moved first: it registered a caveat against the commercial unit on October 12, 2023, and on November 14 sued 1637102 Alberta for foreclosure in Action No. 2301-15033, claiming $175,000 in unpaid condominium fees. A certificate of lis pendens went on title on December 1, and on December 6 the company was noted in default, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 9–12 and Tab 4.

ATB's receivership application, filed January 9, 2024, describes the lending. Starke Capital Corp. held two non-revolving reducing facilities, of up to $7,733,086.94 and $470,771.76, both maturing on January 31, 2022 and secured by, among other things, a collateral mortgage of $8,800,000 dated May 3, 2016 and a general assignment of rents and leases; 1637102 Alberta, its sole voting shareholder and the registered owner of the land, guaranteed them. The debtors owed $8,564,285.29 on January 9, 2024 and had made no payments since March 2023, per the Application of ATB Financial, Jan. 9, 2024, paras. 11–18, 26.

ATB's list of defaults included the transfer of title from the borrower to 1637102 Alberta on or around May 9, 2018, which the application says was made "without the knowledge or consent of the Lender" after its mortgage was registered; condominium arrears of $141,100.03 as at July 5, 2023; and the corporation's statement of claim itself. "In light of the filing of the Condominium Corporation Statement of Claim," the application says, "there is a serious risk of the loss or deterioration of the Lender's collateral." It also pointed to debtors that "appear to have no management," to vacant space and to a material lease that had expired without extension or replacement, per the Application of ATB Financial, Jan. 9, 2024, paras. 26, 33, 35–36, 38(d). The order of January 18 stayed every proceeding against the debtors or their property, the foreclosure included, per the Receivership Order, Jan. 18, 2024, para. 8.

Two years as landlord

BDO's first report counted nine commercial units, five of them let to three tenants: Alberta Infrastructure, on a month-to-month arrangement since its long-term lease lapsed around June 2021; the Health Quality Council of Alberta, on a lease running to 2033; and a yoga studio. Together they paid approximately $111,765 a month plus GST, and approximately 9,336 square feet stood empty, per the First Report of the Receiver, Nov. 24, 2025, paras. 16–18. A leasing effort through Tristone Commercial Real Estate Ltd. from April to December 2024 finalized no lease, primarily because of "tenant concerns about the state of the Lands and the ongoing receivership proceedings." Repairs and maintenance to October 31, 2025 came to $615,188, most of it for replacing two rooftop air handling units, per the First Report of the Receiver, Nov. 24, 2025, paras. 37(f), 42.

Avison Young marketed the property from about August 28, 2025 to more than 1,000 parties; offers were due on October 3, and the receiver signed a sale agreement with an individual purchaser, the price going to the court in a confidential supplement, per the First Report of the Receiver, Nov. 24, 2025, paras. 4, 45–49. Justice R.W. Armstrong approved the sale on December 5, 2025. His vesting order discharged the corporation's caveat and lis pendens from title along with ATB's mortgage and put the net proceeds "in the place and stead" of the assets sold, so that claims may be asserted against them "with the same priority as they had with respect to the Purchased Assets immediately prior to the sale," per the Approval and Vesting Order, Dec. 5, 2025, paras. 3, 8 and Sched. "C".

The sale closed on February 9, 2026. The receiver's statement of receipts and disbursements records $3,300,000 from the sale and $2,542,758 in rent collected over the receivership, against outlays that include $409,959 in receiver's fees and $143,602 in legal fees, per the Second Report of the Receiver, Sept. 21, 2026, para. 13 and App. "B". In consultation with the corporation and ATB, BDO withheld $330,000 of the proceeds, the corporation's estimate at the time, in case the corporation prevails on priority, and paid ATB an interim distribution of $2.55 million. On a payout statement dated September 11, 2026, ATB is still owed approximately $7.78 million plus costs and interest, and the receiver reports that it "will experience a significant shortfall on the ATB Secured Indebtedness irrespective of whether or not this Court approves the Condo Corp Claim," per the Second Report of the Receiver, Sept. 21, 2026, paras. 16–18.

The statute, the bylaw and the choice of remedy

The corporation's argument begins with s. 39.2 of the Condominium Property Act. Filing a caveat for unpaid contributions gives a condominium corporation a charge against the unit, and under subsection (8) that charge has, from the date of filing, "the same priority as a mortgage under the Land Titles Act." The brief concedes that subsections (7) and (8) "do not specifically speak to priority as between a condominium corporation and a prior registered mortgage," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 23–26. It builds instead on two other subsections. Subsection (3) lets a mortgagee pay a delinquent owner's contributions and add them to the mortgage debt, which the brief says would serve no purpose if the mortgage already ranked first: "why would a mortgagee ever pay unpaid condominium fees?" Subsection (11) keeps the caveat on title, until the amount is paid, after another person takes the unit through a foreclosure, an action for specific performance or a tax recovery proceeding. From that the brief concludes that condominium corporations "always enjoy a priority over a prior registered mortgage when the mortgagee exercises the primary remedy of foreclosure," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 27–31.

Receivership is not on the subsection (11) list. The brief's answer is that the legislature's intent is clear, and that reading the Act to favour a mortgagee because it chose receivership over foreclosure "would create a legal absurdity" and a precedent reaching "approximately 8000 registered condominium corporations in Alberta," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 32–34. It cites Justice Dunlop's decision in Condo Plan v Owners and Mortgagees, 2025 ABKB 43, a contest over insurance proceeds that the brief acknowledges arose under a different section, and Justice Graesser's description in Tutt v The Owners: Condominium Plan No. 7822572, 2020 ABQB 213, of the caveat right as "a type of exception to indefeasibility." And it invokes routine practice on the foreclosure list: "Banks routinely pay out unpaid condominium fees when their security is impacted. They would not do so if they held priority," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 22, 35–41.

Plaza 14's own bylaws, adopted by special resolution in March 1993, are the complication. By-law 30(f) makes the corporation's lien "subject always and subordinate to, and shall not affect the rights of the holder of, any indebtedness secured by any registered mortgage," and obliges the corporation to sign postponements at a mortgagee's request, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, Tab 2, By-law 30(f). The brief acknowledges the clause and calls it ultra vires, because s. 34.1(1) of the Act makes the Act prevail over a conflicting bylaw and nothing in s. 39.2 lets a corporation alter the statutory ranking. Were the clause enforced, it says, "the entire condominium collections framework would collapse for nearly every condominium that has not updated their bylaws since the 1990's (when subordination clauses were common)," per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 42–46.

On the equities, the brief calls the post-tension work and insurance "essential, safety related, non-discretionary expenditures" whose commercial share the residential owners have carried for almost five years: "In doing so, they preserved ATB's security out of their own pockets." If priority is refused, it says, the 27 residential owners will absorb approximately $10,000 each, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 47–48. It then turns to why ATB chose receivership: "It is hard to understand why ATB chose receivership, other than to try to gain an advantage against Plaza 14 on the priority issue." The debtor's only asset was the commercial unit, the brief says, ATB held an assignment of rents, most occupied suites were leased by the Government of Alberta, "an easy and reliable tenant," and receivership was "a different, far more expensive, method" of enforcing the security, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 56–57.

The claim it puts forward is $239,717.62: $115,861.89 in post-tension costs, $5,202.60 in insurance, $58,172.86 in interest and $60,480.27 in legal costs. The bylaws set interest at the Royal Bank of Canada's commercial prime rate in Calgary plus 4% and allow the corporation its legal fees on a solicitor-and-own-client basis, per the Brief of Condominium Corporation No. 8111330, Sept. 16, 2026, paras. 51–54 and Tab 2, By-law 1(m).

What the receiver makes of the claim

BDO's second report traces how the claim reached that figure. The registrations on title were in the amount of $140,878, for 1637102 Alberta's share of post-tension improvements and other charges the corporation funded; shortly before the first report the corporation raised its estimate to approximately $330,000, to cover further costs and solicitor-client costs. Asked for a proof of claim, the corporation submitted "multiple iterations," with supporting material that contained "inconsistencies, errors, and amounts that had been paid including, for example, certain amounts which had been paid by the Receiver," per the Second Report of the Receiver, Sept. 21, 2026, paras. 18–19. The receiver then built a summary schedule of the invoices it understood to be properly supported, and on September 15, 2026 the corporation resubmitted its claim on that schedule at approximately $239,717, with interest of $58,173 "inclusive of pre and post receivership interest charges," per the Second Report of the Receiver, Sept. 21, 2026, paras. 20–21.

The amounts "generally appear to be supported," the receiver reports, though it has had difficulty reconciling the exact figures. If the claim or part of it is found to rank ahead of ATB, BDO suggests the court may wish to direct clarification of three things: interest that "has been compounded which does not appear to be the method of calculation set out in the by-laws"; legal invoices that were redacted, "leaving limited details to ascertain that the time was incurred specifically with respect to this matter"; and maintenance invoices charged 100% to 1637102 Alberta rather than at the 46.9% the bylaws allocate, per the Second Report of the Receiver, Sept. 21, 2026, para. 22. In consultation with ATB, and given the time already spent "at the expense potentially of ATB," it has left those questions until priority is decided, per the Second Report of the Receiver, Sept. 21, 2026, para. 23.

On priority itself, the receiver says ATB and the corporation are best placed to argue it, and that it understands ATB intends to file materials of its own. It adds one thing: its counsel, Burnet, Duckworth & Palmer, "has reviewed this matter and provided an assessment that the ATB mortgage has priority over the Caveat registered by the Condo Corp." Beyond that it takes no position, "other than direction is required as to the distribution of proceeds so that the Receiver may conclude the receivership administration and obtain its discharge," per the Second Report of the Receiver, Sept. 21, 2026, paras. 24–26.

That direction is what the October 2 application seeks. BDO held approximately $535,665 on September 18, 2026; after a $50,000 holdback for its own and its counsel's remaining fees, it expects $485,665 to distribute, and it asks to pay that to ATB, with any further tax refunds recovered from the Canada Revenue Agency, subject to any determination on the corporation's claim. It also asks the court to approve approximately $83,444 in its own fees and approximately $56,991 in its counsel's fees and disbursements for November 1, 2025 to August 31, 2026, and to discharge it on the filing of a termination certificate, per the Second Report of the Receiver, Sept. 21, 2026, paras. 27–38.