Alberta company loses appeal of $236,958.99 support-remittance order

The Alberta Court of Appeal has upheld an order requiring RCI Coatings Ltd. to remit $236,958.99 in unpaid support after a judge found that payments routed through another person were, in substance, money owed to the support debtor.

In RCI Coatings Ltd v Alberta (Director of Maintenance Enforcement), 2026 ABCA 342, released October 26, 2026, the court rejected the company's challenge to both its obligation to pay and the amount ordered.

The ruling turns on the company's obligations under a support deduction notice and the finding about who was actually entitled to its payments. It does not create a general rule making a company responsible for someone else's support debt.

A deduction notice followed by disputed payments

The Director of Maintenance Enforcement served RCI with a support deduction notice in April 2021. It directed the company to remit money payable to the support debtor, whose arrears then stood at $133,010.33.

RCI responded that the debtor had not subcontracted work from the company. In a further communication in February 2022, it said he had not worked or subcontracted for RCI since March 2019.

But in 2023, two RCI clients told the director that the debtor was working on site for the company. The director applied to the Court of King's Bench in December 2024 for payment orders against RCI and two related entities. Shortly before that application, an updated notice had advised RCI that the arrears had risen to $236,958.99.

RCI's evidence was that the debtor was working on its projects through a separate sole proprietor, not directly for RCI. Company payment records showed payments to him ending in March 2019 and payments to that other person starting in June 2019.

The court looked at the substance of the arrangement

At the June 2025 hearing, the chambers judge considered affidavit evidence and brief examinations of the witnesses. The evidence included a transfer of the debtor's RCI shares, the start of substantial payments to the other person, and his continuing use of an RCI email address and company vehicles.

The judge found that the payment arrangement was a "sham" designed to thwart maintenance enforcement. Payments routed through the other person from April 2021 to April 2025 exceeded $500,000. Because RCI had failed to remit the money required by the deduction notice, the judge ordered it to pay the updated support arrears.

The payment history was evidence supporting the ruling, not an additional $500,000 award.

On appeal, RCI argued that the Maintenance Enforcement Act contained no provision deeming one party liable for another person's debts simply because a transaction was described as a sham.

The appeal court said that was not the basis of the order. Section 17(2) binds money already owing or payable by the recipient of a deduction notice to the debtor or the debtor's agent, as well as money that later becomes owing or payable. The judge's finding meant the money directed to the other person was actually money RCI owed the debtor.

The court also rejected the suggestion that the judge had needed to apply a separate legal test for a sham transaction. In this context, the term described a factual conclusion about the true payee. The evidence amply supported that conclusion, and RCI had shown no reviewable error. Section 17(9) permits a payment order when a person fails to pay in accordance with a support deduction notice.

Updated arrears, not the original figure

RCI also argued that recovery against it should be limited to the amount specified in the director's formal application rather than the higher updated arrears.

The court found no unfairness requiring intervention. RCI had received the updated notice and offered no concrete explanation of how it would have prepared differently had the application expressly sought the higher amount against it. Requiring another application solely to update the amount would have served no useful purpose.

The appeal was dismissed, leaving the $236,958.99 remittance order in place. This was a civil support-enforcement ruling, not a criminal fraud conviction or a new damages award. The reasons do not establish that the money has been collected and do not specify an appeal-costs award.