Legal Blog

Construction Trust

University Plumbing v. Solstice Two Limited 2019 Ont SCJ

Owner breached its trust obligations by refusing to pay the contractor and instead paying management fees to its two directors. The judge held the directors personally liable both under section 13 of the Construction Act and by way of a breach of a common-law trust. The judge went so far as to declare that the directors’ liability would survive any bankruptcy. The directors sole defence was that the action was proscribed by the Limitations Act. The judge ruled against them on two grounds. First, one of them had acknowledge the debt in writing and that acknowledgement bound both of them. Second, they had represented that they would pay the amount due once they had collected a particular amount from a third party so that it was not “appropriate” to rush to litigation before giving the directors a chance to do so.

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