Here's The Drill: Commingling Of Funds – Carillion Canada

This is (unfortunately) not such an uncommon issue that can play out on construction projects. For example, if a general contractor becomes insolvent, its unpaid subcontractors and suppliers will be looking to access the funds the contractor had received from the owner but not yet paid out those beneath it in the construction pyramid. In many provinces, the funds the contractor received from the owner will be impressed with a "trust" under the province's construction or builder's lien legislation. This trust is intended to protect the funds so the unpaid subcontractors and suppliers can access them. However, as the recent Carillion decision illustrates, this may not be such a straightforward exercise in every case, especially where the funds have been "comingled" with other monies. As we describe below, in the Carillion case the funds the contractor had received from multiple project owners had been comingled with other monies as part of certain banking arrangements