Legal Blog

Trust Limitation Period

MGL Construction Inc. v. IBuild Corporation 2017 Ont SCJ

Appeal from Small Claims Court decision. Subcontractor rendered invoices on 2 projects more than 2 years before the action was commenced. The action was for breach of contract and breach of trust. The Divisional Court held that the action could continue for the following reasons: (1) the general allegedly had promised to pay the subcontractor, thereby “delaying me”; this promise to pay could be construed as an extension of the limitation period because the subcontractor continued to perform services in accordance with the forbearance. (2) As to the breach of trust claim, the subcontractor had requested an order for financial information as to the state of accounts between the owner and the contractor and these productions might have demonstrated that the contractor did not receive funds from the owner within the limitation period; a trust does not exist until the monies have been received by the contractor. Reason #2 relating to the trust claim is quite valid. Reason #1 relating to the breach of contract claim is not correct; the Limitations Act requires a written acknowledgment of a debt.

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