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SNF Wins Mississauga Board of Trade Award: Employer of the Year

It is a well-known business principle that happy teams are more productive and therefore more profitable (see a recent Harvard Business Review article on this point here.) Speigel Nichols Fox LLP has always understood this and worked hard to keep its team positive and engaged.

We’re therefore thrilled that the Mississauga Board of Trade has recognized Speigel Nichols Fox LLP as this year’s recipient of the Employer of the Year Award at the November 2015 Business Award of Excellence Gala.

According to the Mississauga Board of Trade:

The Employer of the Year Award is awarded to a business in Mississauga that has consistently demonstrated exceptional commitment to engage, retain and develop employees. This organization creates a positive, fair and supportive environment for all employees.

The sold out award ceremony was a glitzy affair with Master of Ceremony Anwar Knight delivering laughs all night “someone cue the Benny Hill theme.”

image courtesy of Mississauga Board of Trade and Gold Media

Partner, Irving Fox took to the stage with Rose Avarino to accept the award and reminded the attendees that we are all privileged to be doing business in the City of Mississauga. He gave full credit for the award to Rose Avarino, a 17-year SNF veteran, whose drive to promote SNF’s attributes was an important factor in SNF’s award.

He further recognised the importance of the SNF team, as a whole, and reminded the audience that a business is only as good as its parts and that a positive team mentality is crucial to the success of any business.

Written by Molly C. Luu Molly Luu is an advocate whose practice focuses on commercial litigation. She has experience representing clients involved in disputes relating to contracts, insolvency and bankruptcy, and construction matters.

Wine Tasting

Paramount

THE INTERACTION BETWEEN PARAMOUNTCY OF LEGISLATION AND THE CONSTRUCTION LIEN FRAMEWORK

In Canada, we have a concept called paramountcy; if federal legislation, enacted within constitutional jurisdiction, conflicts with provincial legislation, then the federal legislation governs because it is paramount. What happens when the federal Bankruptcy and Insolvency Act (BIA) bumps up against the deemed trust provisions in the Construction Lien Act (CLA)? We have had two recent cases attempting to answer this question: Royal Bank of Canada v. Atlas Block Co., a 2014 decision of the Ontario Superior Court of Justice and Iona Contractors Ltd. (Receiver of) v. Guarantee Co. of North America, a 2015 decision of the Alberta Court of Appeal.

Atlas

c/o Flickr purplejavatroll

A concrete manufacturer (concrete blocks, paving stones, masonry, etc.) went into receivership and, ultimately, assigned into bankruptcy. It owed money to the supplier that provided cement for those concrete products. Manufacturer sold its products to construction customers and by retail to the general public.

Supplier claimed that manufacturer held its money in trust for supplier at the time that the receiver was appointed and that the receiver/trustee held money that it collected in trust for supplier. Supplier relied on the deemed trust provisions established under the CLA.

Supplier had two problems.

Tracing

To establish a trust, supplier had to demonstrate that its cement went into products that were then incorporated into construction sites. It would be unable to do this for concrete products that manufacturer sold to retail customers.

The motions judge, relying on an Ontario Court of Appeal decision, held that merely because manufacturer sold some of its products to retailers was not a bar to supplier’s trust claim. However, he noted that supplier still had the ultimate responsibility to prove what percentage of its products were delivered to construction sites and what percentage went to retail customers. This would be a difficult task, but supplier was entitled to try.

Queue Jump

By asserting a trust, supplier was attempting to leapfrog all of the normal unsecured and secured creditors and bypass the BIA rules for the orderly distribution of money in a bankruptcy.

The courts have recognised that a trust at common law does carve out the trust funds from a bankrupt’s estate. However, does a deemed trust, one that is imposed by legislation such as the CLA, have the same effect?

The motions judge held that, to be effective to bypass the BIA distribution rules, then, under paramountcy rules, the deemed trust had to fall within the established criteria for a common law trust. To do so, the trust had to have three certainties: of intention, object, and subject matter. There was no problem with the first two: the intention was to protect people who supplied goods and services to the construction project and the objects of that intention were the actual subcontractors and suppliers.

The real problem dealt with certainty of subject matter. Manufacturer did not segregate its construction receipts from its retail or any other receipts. Similarly, the receiver did not segregate the monies it received from manufacturer’s contractors; the money was all commingled. Supplier acknowledged that it could not trace the funds that manufacturer had deposited into one bank account, but argued that the receiver, being an officer of the court, ought to have put the construction receivables into a separate account. The judge disagreed. He held that the receiver stepped into the shoes of manufacturer and, if manufacturer had no responsibility to separate its receivables collected, neither did the receiver.

The trial judge therefore held that there was no certainty of subject matter, the monies were not subject to a common law trust, and supplier had to claim in the bankruptcy in the same manner as any other unsecured creditor.