Date: July 2024
Our firm recently received an endorsement that I thought would be useful for other construction litigators in Ontario.
In this matter, the defendant had been previously ordered to pay approximately $300k following an interim adjudication. However, the defendant failed to pay the entire amount from the adjudication and instead paid a portion of the amount in trust to its lawyer, citing an existing claim from a surety against the plaintiff and defendant.
Subsequently, the defendant sought to replace a bond filed to vacate the plaintiff’s lien for another bond reduced by an amount that took into account the monies being held in trust by the defendant’s lawyer.
Justice Mills disagreed with the defendant’s proposed calculation of the reduce bond amount and found, in part, the following:
– Paying funds into a lawyer’s trust account fails to achieve a fundamental goal of the Construction Act which is that funds be paid promptly following an adjudication to ensure the flow of money on construction projects.
– The funds held by the defendant’s lawyer cannot stand as security and they cannot be considered paid by the defendant.
– Simply put, a deposit to the defendant’s lawyer’s trust account is not payment to the plaintiff.
Click here for a link to the decision.