On September 18, 2015, the Supreme Court of Canada issued
reasons for judgment in Stuart Olson Dominion Construction Ltd. v.
Structal Heavy Steel, 2015 SCC 43. While in many respects
the decision simply confirmed the remedies available to contractors
and sub-trades under builders' lien legislation, there are
significant unresolved questions with respect to how this decision
will be applied in British Columbia.
The case involved a dispute between Stuart Olson, the general
contractor for the construction of the new Investors Group Field
football stadium in Winnipeg, and Structal Heavy Steel, one of its
sub-contractors. Structal Heavy Steel filed a claim of
builders' lien, which Stuart Olson discharged by posting a lien
bond in court for the full amount of the claim. When the dispute
remained unresolved, Stuart Olson applied to court for a
declaration that it was free to use further funds it received from
the owner without regard to any trust claims against those funds
that Structal Heavy Steel might have, given the posting of the lien
bond as security. The Manitoba Court of Queen's Bench agreed
with Stuart Olson that the lien bond also stood as security for the
trust claims, however the Manitoba Court of Appeal reached the
The Supreme Court of Canada dismissed Stuart Olson's appeal
and confirmed that the lien bond was not posted as security for
both the lien claim and any trust obligations. The
sub-contractor's lien rights and trust rights were held to be
separate and distinct, and the Supreme Court found that posting
security for one claim did not automatically discharge the other.
Interestingly, the Supreme Court suggested in its decision that if
money had been posted in Court – as opposed to a lien bond
– that might have been sufficient to secure any trust claims
as well since payment of trust funds into court as security could
not result in a breach of any trust obligations.
The decision in this case serves to underline that contractors
and sub-contractors have both lien rights and trust rights under
builders' lien legislation, and that these are separate and
distinct rights. Owners or head contractors may be required to post
actual funds in trust as security in order to ensure that both lien
claims and any trust claims are discharged, and thus preserve the
flow of money to the project.
Several unresolved questions remain, however. It is unclear how
the principles in this decision might apply to a Shimco
lien against holdback funds – something which is unique to
British Columbia. In addition, it is unclear whether other
sub-trades or sub-contractors further down the contractual chain
may be able to insist that their trust rights ought to be secured
as well, which would further complicate the process of posting
security and ensuring the continued flow of payments.
It remains to be seen how the implications of the Stuart
Olson decision will play out in British Columbia, but it is
clear that owners and contractors will need to pay careful
attention when posting security for claims.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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