conversion of the trust funds. The contractor is doing
exactly what the Act requires – ensuring the monies
are held in trust for the beneficiary.
If the contractor pays funds into court and the lien claim
later fails, the monies paid into court will be returned to the
contractor, but will still be held in trust for the subcontractor.
These funds remain impressed with the trust; should
the lien claim fail while the trust claim is outstanding,
the cash would continue to be trust funds when
returned to the owner, contractor, or subcontractor.
So long as the trust funds themselves are deposited
with the court, the funds are secure and the trust has
not been breached.
The takeaway for contractors is that there are three
options when a subcontractor places a lien on property. First,
they could allow the lien to remain on the property, second,
remove the lien with a lien bond while simultaneously holding
funds paid for the contract in trust, or third, pay money into
court to remove the lien. The circumstances will dictate
which option the contractor selects, and unfortunately, there
may be times when none of the options appear to be a desirable
option for the contractor. Subcontractors will know this
and use it to leverage a more favourable settlement in litigation
with the contractor. Even with the additional option
given to contractors by the Supreme Court of Canada, the
remedies offered by builders’ lien legislation remain powerful
tools that, in the hands of savvy subcontractors, can be used
to apply tremendous pressure on general contractors.
Kirk A. Vilks is an associate with Fillmore Riley LLP who practises
primarily in the area of civil litigation, with a focus on
construction and insurance litigation. You may reach him at
204-957-8358 or kvilks@fillmoreriley.com.
LEGAL
LIGHTSPRING/SHUTTERSTOCK.COM 70 Q4 2015 www.pilingcanada.ca
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