In this decision, the Ontario Court of Appeal considered whether the funds owing to, or received by, a bankrupt contractor and impressed with a statutory trust created by s. 8(1) of the Construction Lien Act, RSO 1990, c C. 30 (“CLA”), as it was formerly named, were excluded from distribution to the contractor’s creditors pursuant to s. 67(1)(a) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA”). This involved a detailed review of the Supreme Court of Canada’s decision in British Columbia v Henfrey Samson Belair Ltd, [1989] 2 SCR 24. The Court of Appeal found that a statutory deeming provision can give rise to certainty of intention, and that provision s. 8(1) of the CLA is constitutionally valid because the s. 8(1) trust is a matter that is the proper subject of property and civil rights in the province, and there is no operational conflict between s. 8(1) of the CLA and the BIA that would make the doctrine of paramountcy operative. The Court of Appeal also found that amounts owed were debts and were accordingly choses in action capable of meeting the requirement for certainty of subject matter, and that certainty of subject matter was made out because, despite the funds being commingled, it was possible to identify the funds in question. This decision runs contrary to the general understanding in the construction insolvency bar that Ontario CLA trust claims will generally not succeed when challenged by secured creditors in BIA proceedings.
In Apotex Inc v Nordion (Canada) Inc, 2019 ONCA 23 the Court of Appeal upheld a finding of breach of contract and negligence in respect of a contract for the provision of clinical research services, as well as the resultant damages award. The Court clarified the operation of section 5(1)(a) of the Limitations Act, 2002, observing that a claim only becomes discoverable once all the elements of s. 5(1)(a) are met.
In Almalki v Canada (Attorney General), 2019 ONCA 26 the Court of Appeal confirmed that a carefully worded contingency fee agreement does not necessarily run afoul of the Solicitors Act even where it entitles counsel to a percentage of any amounts paid to the client for legal fees (which is prohibited save for in certain circumstances). Such agreements are acceptable so long as they conform with section 28.1(8) of the Solicitors Act, as the Court found to be the case here.
Other topics covered this week included forbearance agreements, seniority in the collective bargaining context, agreements of purchase and sale and a provincial offences decision which examined sentencing principles.
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