Legal Blog

Acquiesce

Section 13(1) of the Construction Act attributes personal liability to a director, officer, and person in charge, of a corporate contractor that breaches the trust fund provisions if that person “assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to (a) breach of trust by the corporation.” This determination is a question of fact. Sometimes it is fairly obvious; sometimes it is not.

In Gurkal Transport v. Grittani, a 2019 decision of the Ontario Superior Court of Justice, the judge found without difficulty that the corporation had breached its trust fund duties. The real dispute was whether the wife of one of the directors was personally liable – given that the two directors were each bankrupt.

The wife claimed that, as the corporation’s bookkeeper, she merely took instruction from her husband and wrote the cheques to whomever he directed; she, therefore, did not assent to the trust breaches. The judge held, after analysing the evidence presented, that the wife knew the corporation was in financial difficulty and, even if she only did what she claimed, she went along with her husband’s direction and, knowing the trust issues, “clearly assented to, or acquiesced in the conduct.”

The judge held the wife liable for the trust breaches.

Image courtesy of Catkin.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.