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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.
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