SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: C12-0003
DATE: 20120719
RE: PAT NOBLE LUMBER & BUILDING SUPPLIES LTD., Plaintiff
AND:
MICHAEL WAYNE BAILEY, carrying on business under the trade name and style of AUSCAN CONSTRUCTION AND RENOVATION and MICHAEL WAYNE BAILEY, Defendants
BEFORE: Justice Robert G.S. Del Frate
COUNSEL: Gisèle Levesque, for the Plaintiff
Defendants, acting in person
HEARD: July 18, 2012 in Parry Sound, Ontario
ENDORSEMENT
[ 1 ] The plaintiff brings a motion seeking a declaration that the materials supplied to the defendants in the sum of $123,421.76, constituted a trust pursuant to the Construction Lien Act, RSO 1990, C. 30.
Background
[ 2 ] The plaintiff provides building materials to the construction industry and from April 20, 2011 to July 5, 2011, supplied materials to the defendants in the amount of $123,421.76. These materials were used by the defendants in the renovation of certain premises known as YMCA Camp Queen Elizabeth, situated in the Town of Honey Harbour, in the Province of Ontario. On May 4, 2012 a statement of claim was issued against the defendants claiming that sum. Default judgement was signed on June 21, 2012 for the sum of $140,093.10 together with costs of $1,290.85.
[ 3 ] The present motion proceeded ex-parte.
[ 4 ] The basis for the trust claim lies in s. 8 of the Construction Lien Act , which states:
“Contractor’s and subcontractor’s trust amounts received a trust ,
8 (1) All amounts, (a) owing to a contractor or subcontractor, whether or not due or payable; or (b) received by a contractor or subcontractor, on account of the contract or subcontract price of an improvement constitute a trust fund for the benefit of the subcontractors and other persons who have supplied services or materials to the improvement who are owed amounts by the contractor or subcontractor. R.S.O. 1990, c. C.30, s. 8 (1) .
(2) Obligations and trustee. The contractor or subcontractor is the trustee of the trust fund created by subsection (1) and the contractor or subcontractor shall not appropriate or convert any part of the fund to the contractor’s or subcontractor’s own use or to any use inconsistent with the trust until all subcontractors and other persons who supply services or materials to the improvement are paid all amounts related to the improvement owed to them by the contractor or subcontractor. R.S.O. 1990, c. C.30, s. 8 (2) . ”
[ 5 ] If such a declaration is made, then the plaintiff will have priority on any other funds that may be owing to the defendants.
[ 6 ] It is clear from the affidavit of Richard Nolin that there remains in place, holdbacks of $36,467.16 and an unpaid balance of $120,251.61 even though the defendants abandoned the contract in the summer of 2001 and subsequently the contract was terminated on October 5, 2011.
[ 7 ] Although it is unknown at this stage exactly how much would still be owing on the contract, it is clear that some funds either from the holdbacks or from the balance paid, are owing. Accordingly, the plaintiff seeks priority over whatever amount may still be due and owing by the owner of the property.
[ 8 ] In my view, this case resembles that of Sunview Doors Ltd. v. Pappas 2010 ONCA 198 , [2010] O.J. No. 1043, in which Weiler J.A. outlined what must be proven to establish a beneficiary of a trust under s. 8(1) of the Act . These four elements are the following:
Academy was a contractor or subcontractor;
Sunview supplied materials to the projects on which Academy was a contractor;
Academy received or was owed moneys on account of its contract price for those contracts; and
Academy owed Sunview money for those materials.
[ 9 ] Transforming those elements to the present case, I find the following:
a) The defendants were a contractor or subcontractor;
b) The plaintiff supplied materials to the projects on which the defendants were a contractor;
c) The defendants received or were owed monies on account of its contract price for those contracts; and
d) The defendants owed the plaintiff money for those materials.
[ 10 ] Accordingly I find that the plaintiff has succeeded in establishing that it is a beneficiary of a trust pursuant to s. 8(1) of the Act.
[ 11 ] Order to issue granting the relief requested in the notice of motion under paragraphs 1, 2, 3, 4 and 5.
[ 12 ] Should it be necessary to address the issue of costs, counsel may contact the trial co-ordinator either in Gore Bay or in Sudbury within the next 14 days.
Mr. Justice Robert G. S. Del Frate
Date: July 19, 2012