Hazelton Development: the lien trades and paragraph 27

Matrex Window System Inc. says it began supplying the Highlight of Mississauga in November 2024. Its railing invoices deducted the 10% holdback, none of which has been paid, and it kept supplying on credit and had no reason to think the project was in difficulty until the demobilization notice of March 6, 2026, according to the six trades' October 20 factum; its lien notices total $1,915,571.89. By September 2026, the factum says, 24 lien claimants held 26 lien notices totalling approximately $10,802,325.50, and three earlier liens had been bonded off with bonds totalling approximately $4.37 million (Ad Hoc Group Factum, Oct. 20, 2026, paras. 29, 32).

Under the monitor's revised draft approval and reverse vesting order of October 19, as the factum describes it, Firm Capital Mortgage Fund Inc. would acquire all of Hazelton Development Corporation's shares, and Hazelton would keep the lands, Firm Capital's debt of $73,515,617 and the registered construction mortgage. Each lien claim would become "an equivalent Excluded Liability Claim against ResidualCo," whose assets are listed as "None." The six trades, filing as the Ad Hoc Group of Lien Claimants, are Matrex, Stellar Formwork Ltd., City Electric Inc., Gillam Urban Constructors Inc., Link Mechanical Ltd. and Eco Drywall Inc., and they do not oppose the acquisition. The group "does not ask the Court to determine that the trades have priority at this time. It asks that their entitlement to a hearing on that question not be extinguished before the hearing occurs" (Ad Hoc Group Factum, Oct. 20, 2026, paras. 4, 27, 33–34).

On October 1 Justice Kimmel adjourned the monitor's motion for that order to a 90-minute hearing beginning at 11:00 a.m. on October 22 and extended the stay to October 31, as reported here on October 2 (Endorsement of Justice Kimmel, Oct. 1, 2026, paras. 1, 10). The monitor, Grant Thornton Limited, served its supplementary report and factum on October 19; the trades' factum says the motion is before Justice Dietrich (Ad Hoc Group Factum, Oct. 20, 2026, para. 33).

A loan "subject to the Construction Act requirements"

The trades begin with the holdback, which, in their factum's words, "lies at the heart of the Construction Act's integrated scheme of rights and remedies"; in return, they say, s. 78(2) of the Act "grants the trades' liens limited priority over building mortgages for any deficiency." Firm Capital's June 8, 2022 commitment letter described an "$80,000,000.00 first mortgage construction loan" that "will be subject to the Construction Act requirements," and the 2022 plan made construction trade claims "Unaffected Claims," which "shall not be compromised," the factum says (Ad Hoc Group Factum, Oct. 20, 2026, paras. 1, 6–7). The funding agreement of July 5, 2022 based advances on the cost to complete, "less 10% of the costs expended as certified by the Project QS," and the charge registered on August 17, 2022 as instrument PR4101588 provides that "all Advances are subject to holdbacks" (Supplement to Thirty-Third Report, Oct. 19, 2026, App. "C", p. 29; App. "E", pp. 71, 90).

On the group's account the holdback ran both ways: Firm Capital advanced net of 10% of certified costs, Hazelton withheld 10% from the trades' invoices, and "The trades therefore supplied that portion of the construction credit themselves." Firm Capital, the factum says, "made no further construction advances from April 2024 through November 2025, while receiving $11,831,419 in interest," a figure the group derived from two of the monitor's cash-flow reports (Ad Hoc Group Factum, Oct. 20, 2026, paras. 16, 24 and n. 33). No factum from Firm Capital is in the record read for this piece.

Paragraph 27

The sanction order Justice Cavanagh signed on July 12, 2022 says at paragraph 26 that the Plan Sponsor's Charge "shall have first priority as set out in paragraph 36 herein," which ranks "the CCAA Charges as among them." Paragraph 27 reaches further. The charge is "a first charge on the Property," ranking ahead of "all other security interests, trusts …, liens, construction liens and certificates of action, charges/mortgages and encumbrances, claims of secured creditors, statutory or otherwise" (Sanction Order, July 12, 2022, paras. 26–27, 36).

The motion record of July 7, 2022 had asked for a charge ranking "in priority to all other charges granted by the Court in these CCAA Proceedings," and its draft order gave the charge "the priority set out in paragraph 26," a ranking of the CCAA charges "as among them" (Motion Record of Hazelton, July 7, 2022, p. 15, para. 19; pp. 61–62, draft order paras. 24, 26). Neither the notice of motion, the monitor's Fourth Report nor the endorsement addressed construction liens, the trades say, and no lien claimant appeared. "At some point after the notice of motion was issued, someone introduced a sweeping new priority provision into the draft Sanction Order," the factum says, calling paragraph 27 "An unexplained addition absent from the original motion materials": "Why the additional language appeared remains unknown. Nothing in the available court record identifies who requested it, why it was necessary, or whether it was circulated before the hearing" (Ad Hoc Group Factum, Oct. 20, 2026, paras. 3, 10–11). The factum names no one; in another passage, asking for close scrutiny of how the trades are treated, it says the group "does not question the Monitor's good faith." The group says it will move for a lien claims process addressing production of, among other records, "the July 2022 drafts of the Sanction Order" (Ad Hoc Group Factum, Oct. 20, 2026, paras. 47, 74).

Justice Cavanagh's endorsement that day described the $80 million loan as "to be secured by, among other things, a first mortgage on the Project lands and a court-ordered super-priority charge," and found that "No creditor should be materially prejudiced as a result of the Plan Sponsor's Charge" (Sanction Endorsement, July 12, 2022, paras. 11, 15(c)). In February 2024 the same judge refused to lift the stay on City Electric's lien claim, not satisfied that it would suffer significant prejudice if the stay continued "for the time being while construction of the Project is being completed, units are sold, and the restructuring process is completed" (Endorsement of Justice Cavanagh, Feb. 22, 2024, paras. 1–2, 20). The trades read the 2022 endorsement as distinguishing two instruments, and say of the 2024 one that "The lien claims were deferred, not extinguished" (Ad Hoc Group Factum, Oct. 20, 2026, para. 12).

The order that replaced registration

The lien regularization order Justice W.D. Black made on Hazelton's motion on April 18, 2024 replaced lien registration with a notice to the monitor; delivering one is deemed to preserve and perfect the lien and carries a Lien Charge. Paragraph 8 ranks that charge "subordinate to the CCAA Charges," with "such priority with respect to other creditors of the Applicant as is accorded to Lien Claims under applicable provincial and federal law, including the Act." Paragraph 11 lets the applicant or the monitor move for a process to determine, among other things, "the attachment or priority of a Lien Charge" (Lien Regularization Order, Apr. 18, 2024, paras. 4, 6–8, 11). Justice Black's endorsement records that no party opposed the order, calls it something of a "bitter pill" for some parties, "including lien claimants," and gives as one ground for approving it "the paramountcy under the CCAA of granting priority for CCAA charges over construction liens" (Endorsement of Justice Black, Apr. 18, 2024, paras. 1–3).