Legal Blog

Set-Off – Trust Fund Provisions

Architectural Millwork & Door Installations Inc. v. Provincial Store Fixtures Ltd 2016 Ont CA

The motions judge held that the general could not set off monies that it claimed due to it by the sub on project #2 against the monies that it owed to the sub relating to project #1. The Court of Appeal dismissed the general’s appeal. It agreed that neither party had pleaded the existence of a breach of a trust fund. Indeed, the defendant had pleaded that it had not been paid by the owner and therefore it had no obligation to pay the sub. Accordingly section 12 of the Construction Lien Act was not in play. More importantly, since section 12 of the CLA does not give the trustee the right to put some or all of the trust funds retained to general use, the purpose of the trust provisions were defeated and any right of set-off was extinguished. Finally, the court agreed that equitable setoff was not available because payment on one construction project was not tied to the other; the projects’ funds were segregated and the projects were undertaken at different times, in different cities, and for different owners.

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