Olson (Stuart) Dominion Construction Ltd. v. Structal Heavy Steel, (2015) 323 Man.R.(2d) 1 (SCC)

• Judge: McLachlin, C.J.C., Rothstein, Cromwell, Moldaver, Wagner, Gascon and Côté, JJ.
• Court: Supreme Court (Canada)
• Case Date: January 19, 2015
• Jurisdiction: Canada (Federal)
• Citations: (2015), 323 Man.R.(2d) 1 (SCC);2015 SCC 43

Olson Dominion Constr. v. Structal (2015), 323 Man.R.(2d) 1 (SCC);

      657 W.A.C. 1

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2015] Man.R.(2d) TBEd. SE.028

Stuart Olson Dominion Construction Ltd., formerly known as Dominion Construction Company Inc. (appellant) v. Structal Heavy Steel, a division of Canam Group Inc. (respondent)

(35777; 2015 SCC 43; 2015 CSC 43)

Indexed As: Olson (Stuart) Dominion Construction Ltd. v. Structal Heavy Steel

Supreme Court of Canada

McLachlin, C.J.C., Rothstein, Cromwell, Moldaver, Wagner, Gascon and Côté, JJ.

September 18, 2015.

Summary:

A general contractor (Dominion) applied for an order that the $15,570,974.53 lien bond it had filed in order to obtain removal of a builder's lien, filed by a sub-contractor (Structal), satisfied Dominion's trust obligation under the  Builders' Liens Act (Act). Structal opposed Dominion's application and brought a motion for an order that Dominion or the owner pay to it all or part of a progress payment to which Dominion appeared to be entitled.

The Manitoba Court of Queen's Bench, in a decision reported at (2013), 289 Man.R.(2d) 194, allowed Dominion's application and dismissed Structal's motion. Structal appealed.

The Manitoba Court of Appeal, in a decision reported at (2014), 303 Man.R.(2d) 122;   600 W.A.C. 122, allowed the appeal in part. The court set aside the motion judge's declaration that the filing of the lien bond by Dominion satisfied its trust obligations relating to Structal and that, upon receipt of the progress payments in question, it could disburse the funds without being in breach of the Act's trust provisions. Dominion appealed.

The Supreme Court of Canada dismissed the appeal.

Mechanics' Liens - Topic 5051

Obtaining a lien - Vacating registered lien - General - The Supreme Court of Canada stated that "[e]nsuring payment of contractors and subcontractors and encouraging liquidity in the flow of funds to them are both significant preoccupations in the construction industry. In addition to common law remedies, two statutory remedies have been developed in provincial legislation to protect those who provide services or materials to a project: construction liens (also known as mechanic's or builder's liens) and statutory trusts. This case requires the Court to consider the interaction between these two statutory remedies in the Manitoba Builders' Liens Act, C.C.S.M., c. B-91 ('BLA' or 'Act'). Specifically, by filing a lien bond in court in order to vacate a builder's lien, has a contractor satisfied its trust obligations with respect to the subcontractors who have registered liens against the land upon which the construction work was being done? The BLA is silent as to how these provisions interact. However, the text and context of the provisions, as well as the history of the Act reveal that these are two separate remedies for unpaid persons who have done work, provided services, or supplied materials for a construction project. Registering a lien bond does not relieve a contractor of its trust obligations under the BLA." - See paragraphs 1 to 3.

Mechanics' Liens - Topic 5051

Obtaining a lien - Vacating registered lien - General - A general contractor (Dominion) applied for an order that the $15,570,974.53 lien bond it had filed in order to obtain removal of a builder's lien filed by a sub-contractor (Structal), satisfied Dominion's trust obligation under s. 4(3)(a) of the Builders' Liens Act - Structal opposed Dominion's application and brought a motion for an order that Dominion or the owner pay to it all or part of a $4,000,000 progress payment to which Dominion appeared to be entitled - The parties were involved in litigation under the contract - A motions judge allowed Dominion's application and dismissed Structal's motion - The payment did not have to be made twice (set-off was allowed) - Further, it would be commercially unreasonable and contrary to the Act's intention to require Dominion in effect to pay $8,000,000 to secure payment of Structal's claim for $4,000,000 - Structal had approved the bond and vacated the lien - Further, the Act did not create an ordinary trust for which Structal had an "unrestricted beneficial interest" - It created a trust to which Structal "may eventually become entitled" - Structal appealed - The Manitoba Court of Appeal overturned the decision respecting the lien bond extinguishing Dominion's trust obligations to Structal - Under the Act, subcontractors had two separate and distinct rights beyond the common law right to sue for breach of contract: the right to the statutory trust and the right to file a lien claim against the property (ss. 4 to 9) - Dominion appealed - The Supreme Court of Canada dismissed the appeal - The court held, inter alia, that "[t]here will never be a requirement for the owner, contractor, or subcontractor to pay the funds at issue to the claimant twice. To the extent that the lien and trust claims are for the same work, services, or materials, payment under the trust will eliminate the equivalent amount payable to satisfy the lien claim. In the present case, Structal acknowledges that, had Dominion paid the trust monies into court, there could have been a reduction in the amount of the lien bond by an amount equivalent to the monies paid into court ... . Structal's acknowledgment on this point is logical: there is no need for a lien bond to secure an amount already secured by trust funds paid into court." - See paragraph 48.

Mechanics' Liens - Topic 7601

Trust fund - The fund - General - The Supreme Court of Canada discussed the trust provisions found in ss. 4 to 9 of the Builders' Liens Act (Man.) (BLA) - The court held that "... the BLA itself contemplates that the lien and trust remedies may be pursued concurrently. Section 66 provides that 'a claim related to a trust fund ... may be brought or joined with an action to realize a lien'. If the trust provisions only protected those without a lien claim, there would never be concurrent claims and s. 66 would have no application. The legislature cannot be presumed to enact superfluous or meaningless provisions. ... Nothing in the BLA suggests that the lien and trust provisions do not remain as two separate remedies. This is not to deny that a contractor or subcontractor may have both a lien and trust claim and that the funds sought under each remedy may be the same. But this does not change the fact that the claimant has access to both of these remedies." - See paragraphs 26 to 38.

Mechanics' Liens - Topic 7607

Trust fund - The fund - Set-off - [See both Mechanics' Liens - Topic 5051 ].

Mechanics' Liens - Topic 7607

Trust fund - The fund - Set-off - The appellant argued that where a lien bond had been filed with the court under the Builders' Liens Act (Man.) (BLA), the bond should stand as security for any potential claim - The Supreme Court of Canada rejected the argument - The court stated that "... a reading of both the lien and trust provisions of the BLA reveals that the filing of a lien bond has no effect on the existence and application of the trust remedy. The purpose of the statutory trust was articulated by the Manitoba Court of Appeal in Provincial Drywall [1993]: 'The trust provisions are designed to help assure that money payable by owners, contractors and subcontractors flows in a manner which is in accord with the contractual rights of those engaged in a building project and it is not diverted out of the proper pipeline' (para. 47). Finding that a trust claim is extinguished by filing a lien bond would undermine this purpose. A lien bond provides no more security than the lien which it displaced: the lien claimant must be successful in the lien action in order to collect the amount secured by the lien bond. If a judgment were to issue invalidating the lien because the lien failed to comply with the requirements in ss. 37 to 45 of the BLA, liability under the lien bond would be extinguished. The claimant would then find itself with no access to the funds guaranteed by the bond. Nonetheless, a contractor or subcontractor may still have a trust claim independent of the lien claim; the lien bond would not have secured this trust claim. ... That the filing of the lien has no effect on the subsistence of the statutory trust is consistent with s. 4(3) of the Act, which provides that the contractor is barred from diverting trust funds for its own use until all subcontractors 'have been paid all amounts then owing to them' (s. 4(3)(a), emphasis added). A subcontractor has not been paid simply by the filing of a lien or by funds or security being posted with the court for the purpose of vacating the lien. A lien bond merely secures a contractor's or subcontractor's lien claim rather than satisfying it through payment. It does not extinguish the owner's or contractor's obligations under the statutory trust." - See paragraphs 39 to 43.

Statutes - Topic 514

Interpretation - General principles - Meaningless or superfluous language - [See Mechanics' Liens - Topic 7601 ].

Cases Noticed:

Provincial Drywall Supply Ltd. v. Gateway Construction Co. et al. (1993), 85 Man.R.(2d) 116; 41 W.A.C. 116 (C.A.), refd to. [para. 19].

Canadian Bank of Commerce v. T. McAvity & Sons, Ltd., [1959] S.C.R. 478, refd to. [para. 36].

Bennett (L.W.) Co. v. University of Western Ontario (1961), 31 D.L.R.(2d) 246 (Ont. C.A.), refd to. [para. 44].

Richer v. Borden Farm Products Co. (1921), 64 D.L.R. 70, refd to. [para. 44].

Statutes Noticed:

Builders' Liens Act, R.S.M. 1987, c. B-91; C.C.S.M., c. B-91, sect. 4(1) [para. 27]; sect. 4(2) [para. 28]; sect. 4(3) [para. 29]; sect. 5(3) [para. 32]; sect. 13 [para. 18]; sect. 55(2) [para. 20]; sect. 56(1) [para. 21]; sect. 66 [para. 37].

Counsel:

Dave Hill, Derek Olson and Michael Weinstein, for the appellant;

Kevin T. Williams and Kyla A. Pedersen, for the respondent.

Solicitors of Record:

Hill Sokalski Walsh Trippier, Winnipeg, Manitoba, for the appellant;

Taylor McCaffrey, Winnipeg, Manitoba, for the respondent.

This appeal was heard on January 19, 2015, by McLachlin, C.J.C., Rothstein, Cromwell, Moldaver, Wagner, Gascon and Côté, JJ., of the Supreme Court of Canada. Rothstein, J., delivered the following decision for the court, in both official languages, on September 18, 2015.