Executive Summary: Key Legal and Evidentiary Issues

• Whether the Builders' Lien Act trust provisions applied despite Raytech not registering liens against the properties.

• The evidence confirmed Maritech received full payment for the Cumberland Health Authority project but failed to pay Raytech its portion.

• The court examined whether Brian and Phillip Farrow were personally liable under the BLA for Maritech’s breach of trust.

• A key issue was whether registration of a lien is a prerequisite for enforcing trust claims under the BLA.

• Raytech bore the onus of proving a trust existed; once established, Maritech had to show the funds were properly disbursed.

• The decision turned on whether the Farrows assented to or acquiesced in the breach of trust by Maritech.

Facts of the case
Raytech Electrical Systems Ltd. subcontracted with Maritech Construction Inc. for two projects. The first was in November 2022, where Raytech supplied and installed electrical cables, wiring, and fixtures at the Cumberland Health Authority office in Amherst. Raytech completed all work without issue, with a total cost of $124,214.12. Maritech made partial payments of $20,987.50 and $44,016.25, leaving an unpaid balance of $59,210.37.

The second project, in July 2023, involved Raytech supplying and installing a PAC pole and components for internet use at Scotia Hyundai. Raytech invoiced Maritech $2,589.06 for this work. No payment was made by Maritech.

Raytech did not register liens against either property. Initially, there was no evidence as to whether Maritech had received full payment from the owners. After the evidence was reopened, it was established that Maritech received full payment for the Cumberland Health Authority project, including a final payment of $38,801.91 from Casey Realty on June 21, 2023. Maritech did not pay Raytech the amounts owed and appropriated the funds for other purposes. There was no evidence that Maritech received payment for the Scotia Hyundai project.

Discussion of policy terms and clauses at issue
The case focused on the trust provisions of the Builders' Lien Act, particularly s. 44B, which declares amounts received on account of contract price as trust funds for subcontractors and suppliers, and s. 44G, which imposes personal liability on directors or officers who assent to or acquiesce in breaches of trust. The legal issue was whether a lien registration is required to invoke these trust provisions. The court relied on Supreme Court of Canada precedents, including Minneapolis-Honeywell and T. McAvity & Sons, and found that the trust and lien remedies are distinct, and a lien is not a prerequisite for enforcing trust rights under the BLA.

Outcome
The court found Raytech proved that Maritech was paid in full for the Cumberland Health Authority project and that trust funds were misappropriated. Maritech was liable for breach of trust in the amount of $59,210.37. Brian and Phillip Farrow, as the directing minds of Maritech, were found personally liable under s. 44G for assenting to or acquiescing in Maritech’s breach of trust.

Raytech’s claim regarding the Scotia Hyundai project was dismissed as Raytech did not prove that Maritech received payment on account of that contract. The court also rejected Raytech’s claim for punitive damages, finding no legal basis for it. Costs were left to the parties to resolve or provide written submissions within 30 days of the decision.