Forsythe (Bankrupt) v. Southport Home Centre Ltd. et al., 2000 PESCTD 104

• Judge: DesRoches, J.
• Case Date: October 31, 2000
• Jurisdiction: Prince Edward Island
• Citations: 2000 PESCTD 104;(2000), 197 Nfld. & P.E.I.R. 183 (PEITD)

Forsythe v. Southport (2000), 197 Nfld. & P.E.I.R. 183 (PEITD);

    591 A.P.R. 183

MLB headnote and full text

Temp. Cite: [2001] Nfld. & P.E.I.R. TBEd. JA.004

PriceWaterhouseCoopers Inc., Trustee of the Estate of Paul E. Forsythe (applicant) v. Southport Home Centre Limited, Thomas MacPherson & CRM Ready-Mix Ltd. (respondents)

(GSC-18089; 2000 PESCTD 104)

Indexed As: Forsythe (Bankrupt) v. Southport Home Centre Ltd. et al.

Prince Edward Island Supreme Court

Trial Division

DesRoches, J.

December 22, 2000.

Summary:

Forsythe contracted to build a house for Newson. The house was substantially com­pleted on February 24, 2000. On March 2, 2000, Newson made the last payment to Forsythe. Forsythe filed an assignment in bankruptcy on March 14, 2000. At issue was who was entitled to a $17,894.09 holdback that Newson had paid into court, the mechanics' lien holders or the trustee in bankruptcy.

The Prince Edward Island Supreme Court, Trial Division, dismissed the trustee's appli­cation for payment out of the monies paid into court. The court held that the holdback was never Forsythe's property. Therefore, it was not subject to the provisions of the Bankruptcy Act.

Bankruptcy - Topic 440.1

Property of bankrupt - Particular property -Holdbacks owing to bankrupt - Forsythe contracted to build a house for Newson - The house was substantially completed on February 24, 2000 - On March 2, 2000, Newson, made the last payment to Forsythe - Forsythe filed an assignment in bankruptcy on March 14, 2000 - Under their agreement, a 15% holdback (as required by the Mechanics' Lien Act) was payable 60 days after completion or aban­donment of the contract - Newson paid the $17,894.09 holdback into court - At issue was who was entitled to the holdback, the mechanics' lienholders or the trustee in bankruptcy - The Prince Edward Island Supreme Court, Trial Division, held that the holdback was never Forsythe's prop­erty and therefore was not subject to the provisions of the Bankruptcy Act.

Building Contracts - Topic 2426

Payment - Holdback - Holdback for benefit of third parties - Rights of third parties to holdback - [See Bankruptcy - Topic 440.1 ].

Cases Noticed:

A.A. Electric Ltd. and Swan Electric Ltd., Re; A.A. Electric Ltd. and Swan Electric Ltd. v. Bank of British Columbia, Tohcan Ltd., Alberta, Department of Labour and Elbec Contractors Ltd. (1978), 21 A.R. 248; 89 D.L.R.(3d) 157 (T.D.), dist. [para. 12].

Bodner Road Const. Co., Re; R. v. Cana­dian Indemnity Co. (1963), 43 W.W.R.(N.S.) 641; 5 C.B.R.(N.S.) 293; 41 D.L.R.(2d) 617, dist. [para. 13].

R. v. Canadian Indemnity Co. - see Re Bodner Road Const. Co.; R. v. Canadian Indemnity Co.

Northwest Electric Ltd., Re, [1973] 3 W.W.R. 156 (B.C.S.C.), dist. [para. 12].

Union Construction Ltd. et al., Re (1980), 42 N.S.R.(2d) 622; 77 A.P.R. 622; 111 D.L.R.(3d) 728 (C.A.), dist. [para. 14].

Donald Developments Ltd. et al. v. Nova Scotia Power Corp. (1989), 89 N.S.R.(2d) 96; 227 A.P.R. 96 (C.A.), refd to. [para. 14].

Hansard Spruce Mills Ltd. (Bankrupt), Re (1953), 10 W.W.R. (N.S.) 344 (B.C.S.C.), refd to. [para. 20].

Rideau Aluminum & Steels Ltd. v. McKechnie et al. (1964), 1 O.R. 523 (C.A.), refd to. [para. 35].

Statutes Noticed:

Bankruptcy and Insolvency Act, S.C. 1992, c. 27, sect. 2(1) [para. 6]; sect. 70(1) [para. 8].

Mechanics' Lien Act, R.S.P.E.I. 1988, c. M-4, sect. 53(4) [para. 16].

Counsel:

Gary S. Scales, for the applicant;

David E. MacLeod, for MacPherson;

E.W. Scott Dickieson, for CRM Ready-Mix Ltd.;

Steven L. Woodman, for Southport Home Centre.

This application was heard on October 31, 2000, by DesRoches, J., of the Newfound­land Supreme Court, Trial Division, who delivered the following decision on January 22, 2000.