Using Lien Bonds On Crown Lands – Is There A Difference?

"Ensuring payment of contractors and subcontractors and encouraging liquidity in the flow of funds to them are both significant preoccupations in the construction industry." The opening sentence of the 2015 Supreme Court of Canada decision in Stuart Olson Dominion Construction Ltd. v. Structal Heavy Steel 2015 SCC 43 (Stuart Olson) succinctly and effectively sets out what is, in practice, a more nuanced "preoccupation" than it may seem.

One of the primary disruptors of liquidity and the flow of funds on a construction project is the registration of a lien. The effectiveness of the construction lien is precisely because of its impact on the flow of funds on a construction project. Typically, under provincial lien legislation, an owner is required to withhold a certain percentage from payments (commonly referred to as holdback) to a contractor, which varies from province to province (for example, in Ontario it is 10 per cent, while in Manitoba it is 7.5 per cent).