The appellants, contractors who supplied services and materials to an insolvent developer, appealed a motion judge's decision determining the quantum of their priority payables claim under s. 78(2) of the Construction Act.
The motion judge held that the deficiency in the holdbacks should be calculated as ten percent of the unpaid invoices, rather than ten percent of all invoices rendered.
The Court of Appeal dismissed the appeal, holding that where there are no subcontractor lien claims at the time of the priority dispute, and a payer has fully paid invoices from a contractor, there is no deficiency in the holdbacks related to those fully paid services or materials.
Calculating the holdback based on all invoices would result in double recovery for the contractor and unfairly prejudice the building mortgagee and other creditors.
