Law Times

LaW TIMeS • NOVeMBeR 2, 2015 Page 13 www.lawtimesnews.com SUPREME COURT OF CANADA Building Liens TRUST Filing of lien bond has no effect on existence and application of trust remedy Dominion Construction was hired by BBB as general con- tractor to construct new foot- ball stadium. Dominion entered into subcontract with Structal Heavy Steel for supply and in- stallation of steel for project. Dominion started withholding payment from Structal, advis- ing it was using unpaid amounts for back charges it claimed re- sulted from delays attributable to Structal. Structal registered builders' lien against property. Dominion filed lien bond for full amount of builder's lien. Structal approved bond and vacated its lien. Dominion refused to make further pay- ments, maintaining that it had set-off against monies claimed by Structal, that there was no breach of trust, and that Structal was fully secured by lien bond. At Structal's request, BBB with- held $3.5 million payment from Dominion. Dominion applied for declaration that it satisfied its Builders' Lien Act, trust ob- ligations to Structal. Applica- tion judge ruled that lien bond secured Structal's trust claim, which was based on Dominion using BBB's payment of $4.1 million on account of Structal's completed and certified work to pay other contractors and itself. Structal paid its subcontractors in full from its own resources and its subcontract was certified for payment. Judge maintained that lien bond stood in place of lien, securing sum of money claimed by Structal and allow- ing Dominion to disburse funds of progress payment without being in breach of lien act trust provisions. Manitoba Court of Appeal overturned application judge's decision. Dominion's appeal dismissed. Right of lien against interest of owner of land or structure is available to per- sons who do any work, provide any services or supply materi- als in performance of contract or subcontract. Lien creates charge against land in favour of contractors, suppliers and work- ers who can prove their claim. Lien act provides for vacating liens, pending resolution of va- lidity of lien claims, if alternate security, typically lien bond, is posted. Money or security paid into court stands in place of land against which lien was registered. Trust provisions of lien act provide that subcontrac- tors to be paid before owner or contractor can appropriate trust funds for own use. Trust and lien provisions of lien act are two separate remedies. Act does not expressly delineate how lien and trust provisions are to inter- act where both remedies pur- sued concurrently. Filing of lien bond has no effect on existence and application of trust remedy. Lien bond does not constitute security for trust claim and does not result in protection of actual trust monies. Stuart Olson Dominion Con- struction Ltd. v. Structal Heavy Steel (Sep. 18, 2015, S.C.C., McLachlin C.J.C., Rothstein J., Cromwell J., Moldaver J., Wag- ner J., Gascon J., and Côté J., File No. 35777) Decision at 236 A.C.W.S. (3d) 823 was affirmed. 256 A.C.W.S. (3d) 776. Public Utilities RATES Given nature of labour costs, Board did not act unreasonably in not applying prudent investment test Ontario Energy Board disal- lowed $145 million in labour compensation costs related to Ontario Power Generation's nuclear operations applied for as part of rate application cov- ering. Board found that labour costs out of step with compara- ble entities. Majority of Ontario Divisional Court dismissed OPG's appeal and upheld Board's decision. Ontario Court of Appeal set aside decisions of Divisional Court and Board and remitted matter to Board for redetermination. Board ap- pealed. OPG argued that Board legally required to compensate it for all prudently committed or incurred costs, that prudence has particular methodological meaning and that OPG should benefit from presumption of prudence. Appeal allowed. It was not improper, in this case, for Board to participate in argu- ing in favour of reasonableness of its decision. Board was only respondent in initial review and it was exercising regula- tory role by setting just and reasonable payment amounts to a utility. Utilities regulation must encourage investment in robust utility infrastructure and protect consumer interests. It would be inconsistent with stat- utory scheme to presume that utility decisions to incur costs were prudent. Ontario Energy Board Act, 1998 does not pre- scribe methodology Board must use to determine just and rea- sonable payment amounts and imposes on applicant utility the burden of establishing that pay- ment amounts are just and rea- sonable. Board has broad dis- cretion to determine methods it may use; Board not required to use no hindsight, presump- tion of prudence test. Regulator may make use of variety of ana- lytical tools in assessing justness and reasonableness of utility's proposed payment amounts. Statute requires only that regu- lator set " just and reasonable" payments. Impugned labour compensation costs were partly committed, since they resulted from collective agreements, and partly subject to management discretion, since OPG retained some f lexibility to manage total staffing levels. Given nature of labour costs, Board did not act unreasonably in not applying prudent investment test. Board's adoption of mixed approach that did not rely on quantify- ing exact share of compensa- tion costs that fell into forecast and committed categories was proper exercise of Board's meth- odological discretion where dis- puted costs did not fit easily into one category or the other. Ontario (Energy Board) v. On- tario Power Generation Inc. (Sep. 25, 2015, S.C.C., McLachlin C.J.C., Abella J., Rothstein J., Cromwell J., Moldaver J., Kara- katsanis J., and Gascon J., File No. 35506) Decision at 228 A.C.W.S. (3d) 1172 was reversed. 257 A.C.W.S. (3d) 252. FEDERAL COURT Human Rights Legislation DISCRIMINATION No basis in law to support claim of discrimination by Canadian Forces member Applicant joined Canadian Forces in 1999. He served two overseas terms in Afghanistan, in 2004 and 2006. After com- pleting his second overseas tour, applicant was diagnosed with several illnesses, including hy- pertension and high cholesterol in 2006, anxiety disorder in 2007, and myocardial infarction and diabetes in 2010. Despite re- ceiving normal vascular exami- nations in 2010, applicant was assigned medical employment limitations, which meant that he was no longer deployable. Fol- lowing administrative review process, it was recommended that applicant be medically re- leased. Applicant submitted grievance complaint on Febru- ary 20, 2013 requesting that his medical category be reduced to G3, that medical employment limitations be removed from his file, and that his risk assessment be reduced from high to low. Military Grievances Review Committee dismissed griev- ance in March 2014. Applicant applied for judicial review of de- cision. Application dismissed. Applicant's main argument was that Chief of Defence Staff un- lawfully discriminated against him on basis of his medical dis- ability. Canadian Human Rights Act provided that universality of service policy was bona fide occupational requirement and was thus exception to require- ment to establish that accom- modation would result in undue hardship. There was no basis in law to support applicant's claim of discrimination under Act. Nor was there evidence to ground claim of discrimination contrary to Charter. In light of the medical reports as well as the relevant policies of Canadi- an Forces, Chief of Defence Staff reasonably concluded that med- ical employment limitation was valid, that it violated universali- ty of service principle and that it was in best interests of both ap- plicant and CF that applicant be medically released. Decision of Chief of Defence Staff met rea- sonableness standard because it was justifiable, transparent and intelligible, falling within range of possible, acceptable outcomes that was defensible in view of facts and law. Shannon v. Canada (Minister of National Defence) (Aug. 18, 2015, F.C., E. Heneghan J., File No. T-2024-14) 257 A.C.W.S. (3d) 413. CASELAW CaseLaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada, and all Ontario courts. These cases may be found online in BestCase and other electronic resources from carswell.com. To subscribe, please call 1-800-387-5164. 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