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Summary judgment granted for unpaid construction materials and breach of statutory trust, but the supplier could not reallocate the debtor's payments.
A building supplies distributor brought a motion for summary judgment against a construction contractor and its directors for unpaid invoices totalling approximately $254,393.30 (including interest).
The contractor disputed the amount owing and raised a set-off for work performed on an unrelated project.
The court found the action suitable for summary judgment and granted it to the plaintiff.
The court held that the contractor was required to apply payments as allocated by the plaintiff, not as the supplier attempted to reallocate them.
The court also found the contractor liable for breach of statutory trust obligations under the Construction Act for failing to maintain separate trust accounts and for failing to provide an accounting of trust funds.
The directors were found jointly and severally liable for the breach of trust.
The court awarded damages to be calculated in accordance with its reasons and fixed costs at $30,000 inclusive of HST.
The court affirmed that Rule 60.08(17) is discretionary and ordered the garnishee to pay acknowledged holdback funds.
The creditor brought a motion for an order compelling the garnishee to pay the outstanding judgment amount, arguing strict liability under Rule 60.08(17) due to the garnishee's failure to file a garnishee's statement and make full payment.
The garnishee contended that Rule 60.08(17) remained discretionary and asserted a right to set-off against the debtors due to alleged overpayment on another project and the debtors' insolvency.
The court found Rule 60.08(17) to be discretionary, ordered the immediate payment of a portion of the holdback funds ($35,006), and suspended the payment of the remaining judgment balance ($131,949) pending a determination in a related construction lien proceeding.
