• No Construction Lien Act (Ontario) Deemed Trust in Bankruptcy
  • June 11, 2014 | Author: Sam Babe
  • Law Firm: Aird & Berlis LLP - Toronto Office
  • In his recent decision in Royal Bank of Canada v. Atlas Block Co. Limited, 2014 ONSC 3062 (“Atlas Block”), Justice Penny of the Ontario Superior Court of Justice (Commercial List) held that trust claims pursuant to section 8 of the Construction Lien Act (Ontario) (the “CLA”) do not survive the bankruptcy of the would-be trustee debtor. Justice Penny held that the CLA deemed trust provisions are not an exception to the general rule, laid down by the Supreme Court of Canada a quarter century ago, that a statutory trust is not preserved in bankruptcy by operation of paragraph 67(1)(a) of the Bankruptcy and Insolvency Act (the “BIA”) unless all marks of a common law trust are also present. In particular, any commingling of funds destroys the required certainty of a valid trust, even where tracing is possible.