Sunview Doors Limited v. Pappas 2010 ONCA 198, Released
16 March 2010
Construction Law – Statutory Trust – Breach
of Statutory Trust – No Specific Intent or Knowledge of
The Plaintiff, Sunview Doors Ltd. ("Sunview"),
manufactures supplied custom-made patio doors for contractors.
Between September 2005 and October 2006, Sunview supplied doors to
a subcontractor, Academy Doors and Windows Ltd.
("Academy"), which had carried on business as a
manufacturer, supplier and installer of windows, doors and curtain
walls in renovated and retrofitted low and high-rise buildings. The
doors were supplied by Sunview on $100,000 unsecured credit. Before
Sunview received any payment, Academy went bankrupt. Sunview
brought an action for breach of contract against Academy on the
basis of the unpaid accounts. Additionally, Sunview sought a claim
for breach of trust against two directors of Academy as well as
Academy's office manager. This second claim was brought
pursuant to the combined operation of s. 8, the statutory trust
provision, and s. 13, the pierced corporate veil provision, of the
Construction Lien Act ("Act").
The Superior Court had allowed the claim against Academy for
breach of contract, but did not allow the claim for breach of trust
to succeed. The trial judge held that Sunview was not entitled to
benefit under a statutory trust. Turning on the prior decision of a
panel of the Court of Appeal sitting as the Divisional Court in
Central Supply Co. 1972 Ltd. v. Modern Tile Supply Co.
(2001), 55 O.R. (3d) 782, the trial judge held that Sunview could
not establish as a prerequisite that at the time it sold or
supplied its doors to Academy, it had intended that they
be used for known and identified improvements
(emphasis added). In other words, Sunview was not able to identify
the particular projects that the doors were used for, but that they
had been requested by Academy for existing projects based on the
In this case, a unanimous five-member panel of the Court of
Appeal upheld the Divisional Court's decision on the basis of
distinguishing Central Supply. The decision effectively
creates a lower threshold for a supplier in the construction
industry to claim under the statutory trust.
Specifically, the Court stated that it is not necessary for a
supplier to demonstrate an intention to supply materials to a known
and specific improvement, but instead "[p]rovided that the
supplier is able to link the material to the improvement for which
the subcontractor was owed money or has been paid, the supplier
will be entitled to the benefit of the s. 8 statutory trust in the
The decision is intended to expand the statutory trust provision
to accord with its previous application prior to Central
Supply. The statutory trust under the Act is meant to
give a supplier a separate statutory form of security for a full
payout of monies received by the contractor or subcontractor beyond
the limited holdback amounts available in a lien action.
While the Court recognized that Central Supply attempts
to address a legitimate concern about an overly broad remedy, the
Court provides that the threshold of demonstrating "a
link" is sufficient to limit the use of the trust remedy to
persons working in the construction and building repair industries
In this case, Sunview established the requirements for the
creation of a statutory trust: (a) Academy was a subcontractor; (b)
based on the particular facts of this case, sufficient efforts had
been made by Sunview to demonstrate that it had supplied materials
to projects on which Academy was a contractor; (c) Academy had
received monies on account of its contract price for those
projects; and (d), that money was owed to Sunview from Academy.
Resultantly, Sunview was a proper beneficiary under the s. 8(1)
trust provision of the Act.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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