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ARTICLE · 12 FEBRUARY 2018

Third Strike For Ontario Construction Lien Act Deemed Trust In Bankruptcy

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In a January 31, 2018 decision from the bench in the matter of Royal Bank of Canada v. A-1 Asphalt Maintenance Ltd. (Court File No. CV-14-10784-00CL) ("A-1 Asphalt") ...

CanadaInsolvency/Bankruptcy/Re-Structuring
Sam Babe
Sam Babe
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In a January 31, 2018 decision from the bench in the matter of Royal Bank of Canada v. A-1 Asphalt Maintenance Ltd. (Court File No. CV-14-10784-00CL) ("A-1 Asphalt"), Madam Justice Conway of the Ontario Superior Court of Justice (Commercial List) (the "Court") held that the deemed trust provisions of subsection 8(1)(a) of the Construction Lien Act (Ontario) (the "CLA") were not, on their own, sufficient to create a trust recognized in a contractor's bankruptcy or proposal proceedings. A-1 Asphalt is the third consecutive decision, after Royal Bank of Canada v. Atlas Block Co. Limited, 2014 ONSC 3062 ("Atlas Block") and Bank of Montreal v. Kappeler Masonry Corporation, et. al., 2017 ONSC 6760 ("Kappeler Masonry"), in which the Court has upheld the priority of a Personal Property Security Act general security interest over CLA deemed trust claims in a Bankruptcy and Insolvency Act (the "BIA") proceeding.

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