31 Issue 4 Winter Edition 2017 UPWORD BENCHMARKS allowed the rights of the bonding company and subcontractors to defeat CRA’s claim to priority. From the perspective of the bonding company, the decision raises issues as to the security, or lack thereof, it may have when providing a labour and materials bond or performance bond for a general contractor – particularly when subcontractors are paid out and a holdback remains available. Because of the permissive wording of the contract between the general contractor and owner as to whether there is any obligation for an owner to pay subcontractors directly, it also raises issues of whether a differently worded contract, or a differently worded Act, would make any difference to the outcome. From the perspective of subcontractors and suppliers “below” the general contractor in the construction pyramid, this decision is a recent confirmation by the Manitoba Court of Queen’s Bench that, despite the otherwise strict legal requirements in the Act designed to protect those parties, in these situations CRA has priority to both the contractual and statutory holdback on construction projects. The decision has been appealed to the Manitoba Court of Appeal. What decision the Court of Appeal may render on these issues remains to be seen. It is worth noting that in Ontario, as part of the Construction Lien Review Act, considerations are being made as to potential legislative amendments to clarify the priority of those involved in the construction industry to project funds subject to a trust over other creditors that may not be directly related in the industry, in an attempt to strengthen these protections and avoid the result of cases such as this one. Here in Manitoba, the Law Reform Commission of Manitoba is currently performing a broad review of legislation applicable to the construction industry. The Law Reform Commission will no doubt consider any decision of the Manitoba Court of Appeal on this issue, and whether legislative changes can and should be made in an attempt to strengthen the rights of those directly involved in the industry. Note:This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation. John Martens is a partner in the construction law practice at MLT Aikins LLP, Western Canada’s Law Firm. Reach him at (204) 957-4856 or jmartens@mltaikins.com. CONSJRUCJION CANADA f2003J &JD. Building Confidence Through Performance Since the early beginnings, Penn-Co Construction has been a leader in the Manitoba construction industry, equipping our team of skilled professionals with the vision, guidance and tools required to bring construction projects to life. For more information, please contact us: Penn-Co Construction Canada (2003) Ltd. Box 60, ZS Penner Drive, Blumenort, MB ROA OCO Toll Free: 866-326-1341