Secured Creditors And Environmental Liabilities: The Qualex Quagmire Continues

The stakes in the appeal from a recent case in Alberta, Qualex-Landmark Towers Inc v 12-10 Capital Corp ("Qualex") are rising with the recent decision of the Court of Appeal of Alberta granting leave to intervene to the Canadian Bankers Association [Qualex-Landmark Towers Inc v 12-10 Capital Corp, 2023 ABCA 177]. The Canadian Bankers Association sought leave to intervene on the basis that the decision in Qualex creates significant uncertainty for secured lending, particularly where the borrower may have environmental remediation obligations. Being the first decision to apply the reasoning in Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5, [2019] 1 SCR 150 ("Redwater") to non-insolvency proceedings between two private parties, the appeal decision will have far-reaching implications for secured creditors. If upheld, it not only could provide a super-priority security interest to a private party holding a contingent claim – in priority to registered mortgages