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Commercial law - Construction law - Liens - Whether the filing of a lien bond in court in the full amount of a subcontractor’s lien claim extinguishes the contractor’s obligation to that subcontractor under the trust provisions of The Builders’ Lien Act - The Builders’ Lien Act, C.C.S.M. c. B91.

The Appellant, Stuart Olson Dominion Construction Ltd. (“Dominion”) was the general contractor and the Respondent, Structal Heavy Steel (“Structal”) its subcontractor in respect of the structural steel work required for the construction of a new stadium. Structal filed a builder’s lien against the stadium property for the full amount of past due and future invoices, the statutory holdback and costs of delay. Dominion deposited a lien bond for the full amount of Structal’s lien claim. Structal then discharged its lien, but continued to seek payment from Dominion for the monies owing for its subcontract work. Dominion refused payment arguing that the lien bond fully secured Structal’s claim and thus extinguished Dominion’s obligations under the trust provisions of Manitoba’s Builders’ Lien Act, such that it was entitled to use the contract monies otherwise payable to Structal to pay other creditors. Structal had completed all work under the subcontract and all subcontractors had been paid by it in full. Structal had not been paid the outstanding invoices or the statutory holdback. The motion judge found that the filing of the lien bond by Dominion satisfied its trust obligations to Structal under the Act and that, upon receipt of the progress payments from the owner, Dominion could disperse them to other creditors without being in breach of the trust provisions of the Act. The motion judge dismissed Structal’s motion for payment of the progress payments finding the dispute pertaining to Structal’s delay claim, and Dominion’s claim for set-off under their contract, was a dispute that could not be decided at this stage of the proceedings and on the materials before him. The motion judge declared that Dominion’s lien bond extinguished Structal’s trust obligations under the Act and dismissed Structal’s motion for payment. The Court of Appeal allowed the appeal in part. The motion judge’s order declaring that the provision of the lien bond extinguishes the trust obligations of Dominion was set aside. Structal’s appeal from the motion judge’s order dismissing Structal’s motion for payment was dismissed.