Recovering a $190,000 Renovation Deposit From a Vanished Contractor

The situation

Oksana, an air traffic controller, and Fernanda, a pharmacist, had spent two years planning a large addition to their Peterborough home — a new primary suite, an expanded kitchen, and a finished lower level, priced out at roughly $645,000 in total. After interviewing several contractors, they signed with one, Manuel, who came recommended by a neighbour, gave a confident timeline, and asked for a 29 percent deposit of about $190,000 to secure materials and schedule the crew.

They paid by bank draft in the spring. Manuel promised permits would be pulled and demolition would start within a few weeks. Weeks passed. Then months. Site visits kept getting rescheduled, permit applications were never filed with the city, and eventually Manuel stopped returning calls and emails altogether. By the time Oksana and Fernanda came to Treadstone Law, roughly four months had gone by since they had paid the deposit, and not a single tool had touched their property.

The legal problem

On paper, this looked like a straightforward breach of contract: the couple had paid for services that were never delivered. But two things made the situation more urgent than a typical civil claim.

First, under Ontario's Construction Act, money a contractor receives on account of a construction contract must be held in trust for the owner until the work it was meant to pay for is actually done. A contractor who takes a deposit, does no work, and spends the money on something else — payroll for other jobs, personal debts, whatever it might be — isn't just in breach of contract. They may also be in breach of a trust obligation, which matters both for the strength of the claim and, in the right circumstances, for who else can be held responsible if the contracting business is a corporation with little of its own.

Second, our team's early inquiries turned up a troubling pattern. A quick search of court records and public complaints showed at least two other homeowners in similar circumstances — deposits paid, work not started, contact gone quiet — all within the same several-month window. That suggested a contractor who might be spreading a shrinking pool of cash across several jobs at once, which meant the deposit could be gone by the time a lawsuit ran its normal course. In Ontario, a straightforward civil claim can take a year or more to reach trial. If the money had already been moved, spent, or hidden by then, a judgment at the end of that road might be worth very little.

What we did

1. Sent a formal demand with a short, real deadline. Before filing anything, our team sent a demand letter setting out the breach of contract and the trust obligation under the Construction Act, and giving the contractor a short window to either begin the work on a firm schedule or return the deposit in full. This step matters even when a dispute looks headed for court — it creates a clear paper trail, and occasionally it resolves things without litigation at all. Here, it produced silence.
2. Filed a civil claim in the Superior Court without delay. Because the amount at stake was well above the Small Claims Court limit, the claim was issued in the Superior Court, pleading breach of contract and breach of trust, and naming both the contracting business and its principal personally where the facts supported it. Filing promptly mattered — it started the clock on formal proceedings and gave weight to the emergency step that followed.
3. Brought an urgent motion to preserve the funds before they disappeared. Given the signs of a contractor juggling multiple clients' deposits, our team asked the court for an emergency order restraining the contractor from moving, spending, or dissipating funds up to the value of the deposit, pending resolution of the claim. Motions like this require solid evidence — the pattern across other homeowners, the absence of any permits or materials on site, the unreturned calls — because courts are cautious about freezing someone's assets before a case is proven. We assembled that evidence quickly rather than waiting for a fuller record to develop.
4. Used the motion as leverage for a negotiated resolution. Facing a court order that would have frozen business accounts and drawn the attention of other creditors and clients, Manuel's own lawyer reached out to discuss settlement within days of the motion being served. A frozen account is a serious problem for any contracting business still trying to operate, and that pressure changed what had been four months of silence into an active negotiation.
5. Negotiated a secured, enforceable settlement rather than a bare promise to pay. A verbal or informal agreement to repay would have left Oksana and Fernanda exactly where they started if the contractor missed a payment. Instead, the settlement was built as a consent judgment — an agreement filed with the court that could be enforced immediately, without a new lawsuit, if any payment was missed.

The outcome

Manuel agreed to repay the full $190,000 deposit, structured as an upfront payment of about $120,000 within two weeks of the settlement, with the balance of roughly $70,000 paid over the following three months. Every payment was made on schedule. Because the agreement was filed as a consent judgment, a missed payment would have let Oksana and Fernanda enforce immediately — garnishing accounts or registering the judgment against property — without starting over.

The couple ultimately hired a different contractor for the addition, at a similar overall price, and broke ground about seven months later than originally planned. The urgent motion was the turning point: without it, the claim would likely have taken well over a year to reach a resolution, by which point the deposit may well have been spent on other jobs or simply unrecoverable. Acting on the early warning signs — no permits, no materials, other homeowners with the same story — made the difference between a judgment worth chasing and a judgment worth the paper it was printed on.

What you can learn from this