T-2009-75
The Queen (Applicant)
v.
Flintkote Company of Canada Ltd.; Robert H.
Barnes; The Bank of Montreal; Marvin Shore,
Trustee in Bankruptcy of the Estate of Stanley
Norris, formerly operating as Stan Norris, Gener
al Contractor (Respondents)
Trial Division, Mahoney J.—Toronto, June 30;
Ottawa, July 3, 1975.
Crown—Contract for roof repairs—Sums owing by bank
rupt to respondents Flintkote and Barnes— Respondent bank
assignee of bankrupt's book debts—Application for directions
as to whom applicant should pay moneys retained—The
Mechanics' Lien Act, R.S.O. 1970, c. 267, s. 2—The Interpre
tation Act, R.S.O. 1970, c. 225, s. 11.
As between respondents, the bank, and the trustee, the bank
has priority. The trust provisions of The Mechanics' Lien Act,
section 2, do not bind the applicant. And while the contract
provides that the Crown may pay any amount due to contractor
directly to the obligee of and claimants against the contractor,
it is a permissive provision and does not give respondents
Flintkote and Shore a right against applicant. The Court
cannot order applicant to pay but can and does declare the
right to do so, the conditions precedent being established.
Bank of Nova Scotia v. The Queen (1961) 27 D.L.R. (2d)
120, followed.
APPLICATION.
COUNSEL:
K. Von Finckenstein for applicant.
R. C. Delanghe for respondent Bank of
Montreal.
SOLICITORS:
Deputy Attorney General of Canada for
applicant.
Ivey and Dowler, London, Ontario, for
respondent Bank of Montreal.
The following are the reasons for order ren
dered in English by
MAHONEY J.: This is an application under Rule
604 for directions as to whom the applicant should
pay the sum of $6,651.11 withheld and now pay
able by the applicant under the terms of a contract
in writing with the bankrupt Stanley Norris. A
further $2,000 is being retained under the terms of
the contract, some or all of which may become
payable after October 15, 1976. The contract was
for roof repairs to the Federal Building in Sarnia,
Ontario. The sums of $7,368.98 and $596.59 are
owing by the bankrupt to the respondents Flint-
kote and Barnes respectively for materials supplied
to and incorporated in the work performed by the
bankrupt under the contract. The respondent bank
is assignee of the bankrupt's book debts and has
given due notice of that assignment to the
applicant.
The decision of this Court in Bank of Nova
Scotia v. The Queen' would appear to determine
the issue as between the respondents the bank and
trustee. The bank's assignment has priority.
That does not end the matter. There is no
question in my mind that the trust provisions of
section 2 of The Mechanics' Lien Act 2 of Ontario
do not bind the applicant. In view of the express
provisions of section 11 of The Interpretation Acta
of Ontario, it is not necessary to consider that
argument further.
The contract itself, however, contains the fol
lowing provision:
12. (2) Her Majesty may, in order to discharge lawful
obligations of and satisfy lawful claims against the Contractor
or a subcontractor arising out of the execution of the work, pay
any amount, which is due and payable to the Contractor under
the contract and from a conversion or a negotiation of the
security referred to in Section 18 hereof, if any, directly to the
obligees of and the claimants against the Contractor or the
subcontractor.
That provision is permissive, not mandatory, and
while there is nothing in the material or the law to
which I have been referred that overrides it, never
theless it does not give the respondents Flintkote
and Shore a right against the applicant. Accord
ingly, this Court cannot order the applicant to pay
the said respondents but it can, and does, declare
that she has the right to do so if she wishes, the
conditions precedent to such an exercise of discre
tion being established.
' (1961) 27 D.L.R. (2nd) 120.
2 R.S.O. 1970, c. 267.
R.S.O. 1970, c. 225.
ORDER
1. IT IS DECLARED THAT the applicant may pay
the said monies, together the interest accrued or
accruing thereon, rateably to the respondents
'Flintkote and Shore to the extent necessary to
satisfy in full, but without interest, their respective
claims of $7,368.98 and $596.59.
2. IT IS ORDERED THAT any of the monies not
paid pursuant to paragraph 1 hereof be paid to the
respondent Bank of Montreal.
3. IT IS FURTHER ORDERED THAT the applicant
have, as a first charge on such monies, its costs of
this application and the earlier application for
directions which are fixed at $200 inclusive of
disbursements in lieu of taxation.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.