At a time a construction company ("Mid-Plains") abandoned work on a contract for a Crown agency ("TransGas"), TransGas, in addition to holding "holdback" funds as required under the Builders' Lien Act (which were not at issue in the action), held additional contract funds payable to Mid-Plains for the work done under the abandoned contracts. Before finding that the federal Crown had a priority under s. 224(1.2) over builders' lien claimants of Mid-Plains with respect to the additional contract funds, Tallis, J.A. found that s. 224(1.2) had as its purpose the expedient collection of withheld tax monies and, therefore, was intra vires the powers of the federal Crown under s. 91(3) of the Constitution Act, 1867. In addition, the Court rejected a submission that s. 244(1.2) should be regarded as authorizing unreasonable seizures contrary to s. 8 of the Charter.
The 90-day requirement in s. 224(1.2) was met given that within 90 days of a second requirement to pay issued by the Minister, TransGas was directed by court order to pay the amounts in question into Court "forthwith" which payments had the effect of vacating the liens and of discharging the contractual liability of TransGas to Mid-Plains, as well as the statutory liability to the lien claimants in relation to amounts paid in.