A Prince George contractor who failed to meet the deadline for construction of a new home has been found in breach of trust for spending money earmarked for the project on unrelated debts.
In November 2016, a fire destroyed a home in the 13000 block of Buckhorn Lake Road and the insurer subsequently agreed to provide just under $445,000 toward building a new one.
In late March 2017, the owners signed a contract with John Mehrassa, owner of JTM Solutions Ltd., to do the work.
Mehrassa was given five months to complete the job. Under the contract's payment schedule, he was to receive 30 per cent upon permit approval, 30 per cent at lock up, and 30 per cent at occupancy and final inspection while the remaining 10 per cent would be held back for 45 days.
Mehrassa received a first payment of $133,463.34 in mid-May 2017 and on that same day, $130,000 was transferred to an account held by his wife, Tina Wendy Mehrassa, through a numbered company. When lock up was achieved, a second payment of the same amount was issued to JTM, of which $133,000 was transferred to his wife's account.
In both cases, according to a summary in a reasons for decision issued this week by B.C. Supreme Court Justice Ron Tindale, the funds were used to pay various payees, "many of whom were not owed money on account of the project to rebuild the home."
When occupancy status was not achieved by the Aug. 30, 2017 deadline, no further payments were provided and three liens were filed against the home on behalf of unpaid contractors.
According to affidavits provided by the insurance adjuster, John Mehrassa blamed subcontractors for missing the deadline and agreed to pay the monthly rent of the couple for whom the home was being constructed. Then, at the end of 2017, he admitted to the adjuster that the money was all gone and used to pay off other debts.
Mehrassa had contended the first and second payments were "earned money," but Tindale found the funds constituted a trust with a fiduciary obligation tied to them.
"This is not a case where funds were comingled with other funds in the same account to advance multiple projects," Tindale wrote. "The funds were almost entirely transferred to an outside entity unrelated to the project on the same days they were deposited."
As a result of the Mehrassa's actions, the occupancy stage was never reached and the liens were filed, Tindale found.
Damages will be assessed at a later date.
