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Following are our summaries of the civil decisions of the Court of Appeal for Ontario this past week. The Court released a number of decisions this week, including an important pronouncement on Construction Act trusts, and the ability of the provincial legislature to establish trust certainties, in The Guarantee Company of Canada v Royal Bank of Canada, 2019 ONCA 9.
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,  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. Continue Reading BLANEY’S APPEALS: ONTARIO COURT OF APPEAL SUMMARIES (JANUARY 14 – 18, 2019)