Builders' Lien Act Trust Survives Challenge

Iona Contractors Ltd. v. Guarantee Company of North America

The Alberta Court of Appeal released its much anticipated decision addressing the interaction between the trust provisions of the Builders' Lien Act ("BLA") and the Bankruptcy and Insolvency Act ("BIA") in Iona Contractors Ltd. v Guarantee Company of North America, 2015 ABCA 240 on July 16, 2015.

Since the release of the Queen's Bench decision on June 10, 2014, there have been numerous articles and presentations discussing the decision of the Chambers Judge which did not fully capture the arguments or the issues regarding whether a trust created by provincial lien legislation survives in a bankruptcy.

The majority decision of the Alberta Court of Appeal, in allowing the appeal and overturning the decision of the Chambers Judge, in a well-thought-out and thorough examination of the issues and the law has clarified the interplay and priorities between the BLA trust provisions and the BIA.