Canada: Can A Lien Bond Satisfy A General Contractor's Trust Obligations? An Analysis Of The Recent Stuart Olson Dominion Construction Ltd v Structal Heavy Steel Decision

Last Updated: April 12 2016
Article by David De Groot and Kyle Isherwood


The Supreme Court of Canada's ("SCC") recent decision in Stuart Olson Dominion Construction Ltd v Structal Heavy Steel1 ("Stuart Olson") has important implications for the construction industry. In Stuart Olson, the SCC considered whether an unpaid subcontractor had valid and distinct claims against a general contractor under both the statutory trust and construction lien of Manitoba's Builders' Liens Act ("Manitoba BLA")2.


Stuart Olsen Dominion Construction Ltd. ("Dominion") was the general contractor for the construction of a stadium at the University of Manitoba. Dominion entered into a subcontract with Structal Heavy Steel ("Structal") for the supply and installation of steel for the stadium.

In April 2012, Dominion began withholding Structal's payments, originally stating it was because the owner was late in paying but later saying that it was due to delays attributable to Structal. As a result, Structal registered a builder's lien against the property for over $15 million. In response, Dominion filed a lien bond for the full amount in the Manitoba Court.

Structal accepted the bond and vacated its lien on the property. However, Structal claimed that any further payments made to Dominion by the owner were still subject to the statutory trust provisions under the Manitoba BLA and Dominion could not use the money until it paid Structal.  In the Manitoba BLA, the trust provisions require a general contractor to hold any money it receives from the owner in trust for unpaid sub-contractors until all sub-contractors are paid.3

Dominion submitted that because the lien bond fully secured any amount unpaid to Structal, Dominion did not have to hold the money in trust and make payments to Structal. They also submitted that Structal's approach would require them to pay twice. The owner of the property, at Structal's request, withheld over $3 million because of Dominion's alleged violation of the trust provisions of the Manitoba BLA. Dominion applied to the court for a declaration that the lien bond satisfied the Manitoba BLA's trust conditions. Structal sought its own declaration requiring full-payment, without deduction or set-off, once the owner paid Dominion.

The issue was whether the lien bond satisfied Dominion's requirements under the trust provisions of the Manitoba BLA.

Do Lien Bonds Satisfy a General Contractor's Trust Obligations?

The SCC noted that the trust and lien provisions of the Manitoba BLA are separate remedies.4 The SCC distinguished the two remedies by noting that the statutory trust is much broader, applying not only to subcontractors, but also to the Workers Compensation Board, workers employed by the general contractor, and the owner for any set-off or counterclaim.5 Similarly, the SCC had distinguished between the application of liens and trust provisions in a previous decision,6 and the Manitoba BLA itself recognized that the two remedies were distinct by expressly allowing a trust claim to be joined with a lien claim.7 However, the legislation did not explain how these two remedies are to interact if a subcontractor claimed both at the same time. The SCC concluded that Structal had access to both remedies.

In other words, filing a lien bond has no effect on the application of the statutory trust.8 The purpose of the trust provisions is to ensure that the flow of money is not improperly diverted. If Dominion could satisfy the trust provisions through a lien bond, then the purpose of the trust would be compromised,9 because a lien bond does not pay the subcontractor, it only secures the subcontractor's lien claim. Similarly, if the lien was found invalid for any other reason, including being registered too late, the subcontractor would lose all security. Filing a lien bond does not control the general contractor's use of money received and therefore a lien bond does not accomplish the purpose of the statutory trust.

The SCC also rejected Dominion's submission that if the lien bond did not satisfy the trust provisions, then general contractors would essentially have to pay twice for the same services. Instead, the SCC found that paying the statutory trust funds to the court to vacate the lien would avoid any risk of double payment. Using the trust funds in this way is not an improper diversion; if the lien fails, then this money will remain in trust for the subcontractor, subject to the subcontractor proving the value of the work performed.10

Practical Implications in Alberta

This decision was based on the language of the Manitoba BLA; therefore it may apply differently in Alberta. The Alberta Builders' Lien Act11 contains its own trust and lien provisions. In Alberta, a statutory trust is only created after a certificate of substantial performance has been issued.12 Therefore, general contractors only have trust obligations over money they receive after a certificate of substantial performance has been issued. As a result, subcontractors will not as frequently be able to make the statutory trust and lien claims as in Manitoba. As well, general contractors can still post lien bonds to satisfy builder's liens before the certificate of substantial completion is issued.

However, general contractors who are faced with a lien registered after substantial completion have two options: first, they can file a lien bond and continue to hold owner-received funds in trust, or, they can pay the funds held in trust into the court to satisfy the lien and trust claim. The second option avoids the issue of the general contractor requiring double security for the same services. However, it will create cash flow issues, because general contractors will no longer have access to the money paid into court, which they could have if only a lien bond was required.

For a lienholder, the importance of Stuart Olson is that they should include both a lien claim and a statutory trust claim in their pleadings if they are unpaid after a certificate of substantial completion has been issued. Importantly, subcontractors can make claims under the trust provisions even after the period to register a lien has expired or if services were provided before substantial completion, but paid by the owner after substantial completion.


1 Stuart Olson Dominion Construction Ltd v Structal Heavy Steel, 2015 SCC 43 [Stuart Olson].

2 Builders' Liens Act, CCSM c B91 [Manitoba BLA].

3 Manitoba BLA at s 4(1).

4 Stuart Olson at para 32.

5 Stuart Olson at para 32.

6 Stuart Olson at para 36.

7 Manitoba BLA at s 66.

8 Stuart Olson at para 39.

9 Stuart Olson at para 41.

10 Stuart Olson at para 46.

11 Builders' Lien Act, RSA 2000 c B-7 [Alberta BLA].

12 Alberta BLA at s 22(1).

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.