Robins Appleby

Court of Appeal confirms additional protections for contractors in construction projects: Urbancorp Cumberland 2 GP Inc.

Ellad Gersh and Samuel Mosonyi.

This is a significant decision for contractors and for project owners, particularly in the COVID-19 world, in which the financial viability of construction projects is more and more uncertain.

The Ontario Court of Appeal recently considered protections for contractors in construction projects where the owner becomes insolvent in Urbancorp Cumberland 2 GP Inc. (Re). Specifically, the Court of Appeal considered whether section 9 of the Construction Act applies when the owner becomes insolvent.

The Cumberland Group was a residential condominium developer that consisted of a number of related entities. These entities owned unsold condominium units in a project that they had constructed. The appellants were contractors who had supplied work and material to these units and they were owed significant amounts by the Cumberland Group.

The Cumberland Group became insolvent under the Bankruptcy and Insolvency Act and were later afforded protection under the Companies’ Creditors Arrangements Act (CCAA). A monitor was appointed over the Cumberland Group entities under a CCAA order. The monitor sold the condominiums in the project on behalf of the Cumberland Group, and used the proceeds as follows:

  1. To fund the insolvency proceeding and repay financing; and
  2. Excess proceeds of the sale were placed into bank accounts opened by the monitor in the Cumberland group entities’ names.

Section 9 of the Construction Act provides that where an owner’s interest in a premises is sold by the owner, a trust arises over that amount after payment of reasonable expenses by the vendor arising from the sale or to discharge any mortgages on those premises.

The Court of Appeal concluded that the excess sale proceeds in the Cumberland Group’s bank accounts were subject to the section 9 trust and found that there was no conflict between this provision and any federal legislation. Section 9 was valid provincial legislation as it “protected the rights and interests of those engaged in the construction industry and to avoid the unjust enrichment of those higher up the construction pyramid”.

In the circumstances of this case, the Court of Appeal found that the monitor sold the “owner’s interest” in the premises and that the requirements of the trust had been met. Therefore, the funds in the sum of nearly $3.9 million were impressed with a trust in favour of the contractors on a pro rata basis.

This decision is significant because it provides additional protection to contractors working on major construction projects. There are strong policy reasons to protect contractors in such a manner, as otherwise this would impose an unfair burden on contractors to either assess the financial viability of a construction project before commencing their work or take on undue risk in proceeding with construction of a project that could become financially insolvent, thereby leaving them without proper security or recourse.

However, the Court of Appeal cautioned that, depending on the nature of the sale and other factors, the trust may not attach and protect the contractor. Ascertaining whether the trust attaches can be a complex matter, and contractors and owners alike should consider retaining legal counsel for an opinion on this topic.

Original post here.

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Robins Appleby

Legal Urgency in the time of COVID-19

Ellad Gersh, Philip Holdsworth, and Samuel Mosonyi.

If you have an urgent civil or commercial legal matter during the COVID-19 state of emergency, this article is the place to start.

On March 15, 2020, in response to the public health emergency of COVID-19, Chief Justice Morawetz issued an unprecedented “Notice to the Profession, the Public and the Media“, suspending the regular operations of the Ontario Superior Court of Justice until further notice (“March Notice”). An additional “Notice to the Profession, the Public and the Media Regarding Civil and Family Matters” was issued on April 2, 2020 (“April Notice”) and revised on April 22, 2020.

The suspension does not mean that the courts are closed. In an April 6, 2020 virtual fireside chat hosted by The Advocates’ Society, the Chief Justice stated unequivocally that the Ontario Superior Court of Justice “has never closed … we suspended in-court operations, but [the Court] continues to operate, and it is never going to stop operating”.

The March Notice states:

The Court will continue to hear urgent matters during this emergency period. The Court plays a fundamental role in our constitutional democracy. Access to justice for the most urgent matters must always remain available.

With respect to civil and commercial matters,[1] the March Notice defined “urgent” to include:

Urgent and time sensitive motions and applications in civil and commercial list matters, where immediate and significant financial repercussions may result without a judicial hearing.

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Robins Appleby

Supports for Ontario Employers and Employees During COVID-19

Barbara Green and Samuel Mosonyi.

April 21, 2020 (last updated April 27, 2020)

COVID-19 has changed the landscape for employers and employees. We are writing this article to provide some clarity as well as to inform employers and employees what government support is available to them.

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Publications

Sentencing Guidelines for Canada: A Re-Evaluation

Canadian Criminal Law Review 22, no. 3 (2017): 275-295.

Abstract: The current federal Liberal government should analyze the experience of England and Wales when exploring alternatives to mandatory minimum sentences. Sentencing guidelines of the variety used in England and Wales can contribute to consistent sentencing practice while still retaining significant judicial discretion. This study examines the factors that Canadian policymakers should consider in their deliberations using interviews with sentencing guideline drafters, the judiciary, and other criminal justice experts in England and Wales.

[Published by Thomson Reuters; Available on Westlaw].

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Publications

Bylaw Battles: Explaining Municipal-Provincial and Municipal-Federal Win-Rates

Samuel Mosonyi and Dennis Baker, “Bylaw Battles: Explaining Municipal-Provincial and Municipal-Federal Win-Rates,” Canadian Journal of Urban Research 25, no. 2 (2016): 11-22.

Abstract:

Municipal bylaws are routinely contested in court on the grounds that they are “ultra vires” or beyond the legal authority of the municipality. Many of these challenges allege that the municipal exercise of power infringes on federal or provincial powers as assigned by ss. 91 and 92 of the British North America Act, 1867. These conflicts have not been systematically studied and we address this lacuna by surveying the reported cases of municipal-federal and municipal-provincial conflicts in the LawSource database of Canadian judgments. Our preliminary finding—that challenges on federal grounds are much more likely to succeed than those on provincial grounds—requires an explanation. After factoring some disparities in the case sets (including a disproportionate number of zoning cases in the provincial context), we argue that the persistent difference in win-rates is due to a greater acceptance of municipal autonomy in the provincial context (despite their origins as “creatures of the province,” a number of provincial statutes have granted broad authority to many municipalities) whereas the federal conflicts run more clearly against constitutionally-defined interests. We conclude by considering this asymmetry and its significance for Canadian multi-level governance.
Full text here.
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The Globe and Mail

How being a good dinner companion could make your career

Flickering candlelight casts strange shadows along the walls. The accumulated mumble of voices is silenced by the piercing sound of a gong, followed by an immediate eerie quietness. Everyone rises from their seats, gowns billowing. A mesmerizing Latin chant reverberates throughout the medieval hall.

This wasn’t a strange dream, but part of my real-life journey as a graduate student at the University of Cambridge, the world’s fourth-oldest university. As an undergrad in Canada, I would meet up with colleagues over a casual pint at the campus pub, but in Cambridge, socializing takes place in a more formal and structured setting.

The most frequent communal activity that has persisted since the university’s founding is the “formal hall.” This elaborate custom involves the donning of formal attire and gown and partaking in a three-course meal served in ancient dining halls.

Participating in these formals teaches numerous important skills. Firstly, they bring people out of their academic silos and facilitate interactions between disciplines. One evening, I conversed with a gentleman who directed a pharmaceutical company. He was interested in learning about Canada’s Constitution, and afterward he spoke about the clinical trials his company was conducting.

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Huffington Post Canada

Mulcair was the one out of line at Question Period

A sad spectacle occurred in Question Period this Tuesday, with an exchange between Opposition Leader Thomas Mulcair and Paul Calandra, the Prime Minister’s Parliamentary Secretary. Mulcair asked the government whether the Canadian military mission in Iraq would extend beyond thirty days. Calandra responded by questioning the NDP’s commitment to Israel by discussing inflammatory statements made by one of its fundraisers.

Mulcair, with a witty retort on Paul Calandra confusing Iraq and Israel, asked the question again, to which Calandra gave the same reply. After Mulcair tried for a third time, he used his subsequent question to challenge the Speaker’s neutrality.

According to the House of Commons Compendium of Procedure, Government Ministers (or Parliamentary Secretaries acting on their behalf), when responding to a question, may:

  1. Answer the question
  2. Defer their answers
  3. Make short explanations as to why they cannot furnish an answer at that time; or
  4. Say nothing

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