Literature is filled with instances when the characters are
taken from one world in which they are comfortable and understand
what to expect, and are then transported into a very different
world where the "rules" are suddenly very different. A
trade with rights under the Construction Lien Act (the
"CLA") could be forgiven for feeling
very much like they have been put in that situation if a proceeding
under the Companies' Creditors Arrangement Act (the
"CCAA") affects a project on which they
are working. Hence the perhaps colourful literary reference.
The purpose of this paper is to briefly outline some of the
salient ways in which a CCAA proceeding may impact the rights and
obligations of a trade involved in a project, and to offer
suggestions on options for how a trade might be able to better its
position in such circumstances. Much of this is derived from the
recent CCAA proceedings involving Comstock Canada Ltd. and its
While brief mention may be made about construction lien rights
in other insolvency situations (receiverships, proposals, or
bankruptcies), those are not the focus of this paper. Those
situations deserve consideration on their own, because they do not
involve the same impact of the insolvency statute at issue as
discussed in this paper under the CCAA (either at all, or to the
This paper is broken into four sections1, as
A CCAA changes the focus or paradigm for the Court, and how
that impacts the trades.
The changes in procedural rights of trades that can result from
The changes in substantive rights of trades that can result
from CCAA orders.
Ways that a trade can try to protect itself.
Chapter 1 - The paradigm shift under a CCAA ("waking
up after the tornado")
Arguably, the most significant change that may occur for a trade
when a CCAA occurs is in the approach taken by the Courts to the
interests of the trades, or – more to the point – to
the interests of the company, or debtor, under CCAA protection.
This paradigm shift is important to understand, as it explains why
the changes to substantive and procedural rights (to be discussed
further below) may be ordered by the Court.
In the absence of a CCAA proceeding, it would be fair to say
that a trade's interests receive a considerable amount of
protection from the Courts, both through the enhanced remedies for
trades under the CLA and also through common law principles.
When a CCAA proceeding takes place, on the other hand, it
invokes a set of wider and different considerations for the Court.
This is reflected in the considerable case law since CCAA
applications started being used again in the 1980's2
about the purpose of that Act. One of the most recent articulations
of this was in Indalex, where the Supreme Court of Canada
put it this way last year:3
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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