In Peace River Hydro Partners v. Petrowest Corp., the Supreme Court of Canada (SCC) refused to stay a receiver’s civil lawsuit in favour of multiple arbitration proceedings, finding the arbitration agreements were made inoperative by court order to facilitate an orderly and single insolvency process. This case helps resolve a tension between the expedience of a single insolvency process and the presumptive enforceability of arbitration agreements. Background Peace River subcontracted various Petrowest entities to work…

Recent legislative amendments in Ontario are intended to protect construction subcontractors from the claims of other creditors in the event of insolvency. They impose a new requirement to maintain written records for trust funds that will be in effect as of July 1, 2018.

Section 8 of the Construction Lien Act, R.S.O. 1990, c. C.30 provides that amounts owing to, or received by, a contractor on account of a contract or subcontract constitute a trust fund for the benefit of the subcontractors.  These claims have often proved unrecoverable when a general contractor becomes bankrupt because trust claims created under provincial statutes like the Construction Lien Act do not survive bankruptcy unless the trust also meets the common law test for a trust.