This Appeal arose from a dispute between a construction project’s owner, general contractor and one subcontractor. The subcontractor registered two liens against the project lands, one of which was removed upon the owner paying money into Court. In a subsequent settlement between the owner and general contractor, the general contractor was assigned a right to the money paid into Court by the owner. Citing cash flow issues, the general contractor filed an emergency Application to replace the money paid into Court with a lien bond in the same amount. The Appeal addressed whether applicable sections of the Builders Lien Act, RSA 2000, c B–7 permitted substitution of a lien bond for money paid into Court and whether the money paid into Court was impressed with a statutory trust in favour of the subcontractor such that it could not be removed by the general contractor.

The Court of Appeal held that the proposed substitution of money paid into Court was permitted, but that the subcontractor’s issuance of a certificate of substantial performance and resulting impression of a statutory trust prevented the general contractor from accessing the money and replacing it with a lien bond. In response to the general contractor’s argument pursuant to Rule 13.6 that no trust argument could be raised in the absence of its having been expressly pled, the Court held that the argument could be raised and considered since it did not take the general contractor by surprise.