In the Q3 2014 edition of Piling Canada, Sven Hombach
wrote an article titled, “Paying Once, Paying Twice.” The
article discussed a decision by the Manitoba Court of Appeal
in Olson (Stuart) Dominion Construction Ltd. v. Structal
Heavy Steel. That decision has now been reviewed and upheld
by the Supreme Court of Canada in Stuart Olson Dominion
Construction Ltd. v. Structal Heavy Steel. While the Supreme
Court upheld the Manitoba Court of Appeal’s decision, they
also provided some additional comments that will help guide
contractors who wish to avoid providing double security for
a subcontractor’s lien.
The decision deals with the remedies in builders’ lien legislation.
Each province has their own such legislation, but
the effect of the various statutes is similar. Builders’ lien legislation
provides two remedies to trades to ensure they are
paid for their services: statutory liens and statutory trusts. A
lien creates an encumbrance on the land. To remove the lien,
money can be paid or security can be provided by the owner
or general contractor. The security provided is usually in the
form of a lien bond. The payment or security stands in place
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of the land, so that the land itself is no longer encumbered
while the merits of the lien claim are decided. Under either
scenario, the purpose is to ensure the subcontractor gets
paid, either from the value in the land or from the value of
the security posted to discharge the lien.
In addition to the lien remedy, builders’ lien legislation
provides for a statutory trust. The legislation provides that
subcontractors, workers employed by the contractor, and
other beneficiaries are to be paid before an owner or general
contractor can use trust funds for their own use. All
funds received by the general contractor for the general contract
are trust funds held for subcontractors, the Workers
Compensation Board, employees of the contractor and the
owner for any counterclaim related to the performance of the
contract. If a general contractor uses funds that are held in
trust for a subtrade for his or her own purposes, the result
can be stiff fines or jail time for breaching the trust.
Olson (Stuart) Dominion Construction Ltd. v. Structal
Heavy Steel involved a lien claim by a steel subcontractor
totalling approximately $15.5 million to construct the roof
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