Stewart McKelvey

sure upon the Minister by the industry to retain a reasonable degree of certainty. One other note of caution for RFIs is that they should ascertain wheth- er the licences over which they take security are sub- ject to Controlling Agreements. Implications for Other Secured Creditors DFO policies refer to secured creditors as if only an RFI can be a secured creditor. The reality is that a signifi cant portion of the licences are fi nanced pri- vately through fi shing corporations. These organ- izations strive to secure their interests in licences and ideally would do so in the same fashion as an RFI. DFO licensing policy post-Saulnier makes no overt exception and, in theory, recognizes the rights of all secured creditors taking enforceable interests in licences. However, PIIFCAF effectively penalizes non-RFI secured creditors because the exception to Controlling Agreements applies only to RFIs. Re- call that the defi nition of Controlling Agreement is an agreement that permits someone other than the licence holder to control or infl uence the li- cence holder's decision to submit a request to DFO for issuance of a replacement licence. If a secured creditor cannot control or infl uence the ability to transfer the licence, the risk remains that the se- curity can simply melt away. The RFI exception allows banks to employ security agreements, but for private lenders it creates the risk of making the licence subject to a Controlling Agreement which the licence holder would need to declare. There continues to be a strong will within the industry to group licences for more effi cient operation or to operate through corporate entities for a variety of fi nancial purposes. To that end, private lenders continue to seek effective means to operate within the policy but secure their interests in the licences. A variety of methods are surfacing. Some retain the traditional form of trust agreements but include a statement disclaiming any control over the ability to transfer the licence. There have been no judicial decisions yet considering what comprises a Con- trolling Agreement but it is almost certain that a court will look beyond such a statement and focus on the effect of the provisions within the agree- ment. There are a variety of potential options for struc- turing the interests of a private lender in a licence. The challenge is that, under the current policy, the title to the licence must essentially be held by the licence holder free of control or infl uence. While courts have not yet ruled upon what constitutes infl uence in this context, the term is so broad that it presents many challenges for structuring private fi nancing arrange- ments. Various actors within the industry are act- ively looking for creative options to work within the constraints of the policies but still allow a broader range of fi nancing options for licence holders. There are many imaginative and innovative players in this industry who will develop and test new concepts for security over this valuable asset. David G. Henley Halifax, NS 902.420.3381 dhenley@stewartmckelvey.com MECHANICS' AND BUILDERS' LIENS IN ATLANTIC CANADA By Robert M. Dysart W hether a business is directly involved in the construction industry or supplies ma- terials or services to owners, contractors and sub-trades, it is important to know the "nuts and bolts" of mechanics' and builders' lien legislation in the four Atlantic Provinces. The purpose of this article is to provide a brief outline of the various provisions of each province's legislation, and in particular a few of the important deadlines applicable to liens. In all four Atlantic Provinces, the lien protects anyone who provides labour, materials or services which create an "improvement" in land, i.e. any- thing which is constructed in or on land which enhances its value and is permanent. Liens gener- ally do not apply to equipment which is not inte- grated into the real property. Liens arise automatic- ally upon the furnishing of the work, materials or services, but the claimant must take certain steps DOING BUSINESS IN ATLANTIC CANADA SUMMER 2011 5

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