Legal Blog

Adjudication Priorities

Westport Insurance Corporation v. BDA Inc. 2024 Ont SCJ

After a dispute, a general terminated its sub’s subcontract and claimed against the sub’s surety on the sub’s bonds. The surety advanced payments to the general under a mitigation agreement. The sub subsequently obtained an adjudication determination awarding money to it, which the general paid to its lawyer in trust. The sub and the surety each wanted those funds. The judge decided that the surety had a security interest over the money under its indemnification agreement with the sub and therefore had priority but was not entitled to immediate payment due to ongoing litigation between the parties that could affect the surety’s ultimate entitlement. The court ordered the disputed funds to be paid into court pending the outcome of those proceedings.

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