Yeo Towns: every trade paid through a lawyer's trust account

Everyone building Yeo Towns meets on Wednesdays: Fusioncorp Developments Inc., the construction manager; representatives of DUCA Financial Services Credit Union Ltd., which is lending the money; the project's consultants; and the receiver. In the days before the meeting of September 2, 2026, certain trades and Fusioncorp's own consultants had begun raising concerns about non-payment or slow payment of their accounts — notwithstanding, as the receiver puts it, that it had since being appointed funded Fusioncorp in full for all approved invoices on a timely basis. On that call, and on a call with Nick Ainis, Fusioncorp's principal, the receiver learned that Fusioncorp "had been using the funds for purposes other than paying trades who worked on the Project", per the Fourth Report of the Receiver, Sept. 18, 2026, para. 6.0.2.

Yeo Towns is 62 stacked townhouses at 240 Yeomans Street in Belleville, 61 of them pre-sold off plan. Construction had been stopped for several months and the site left exposed to the weather when Justice Kershman appointed KSV Restructuring Inc. receiver and manager of the developer, 2460467 Ontario Inc., on August 12, 2024, on DUCA's application under section 243(1) of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act. The first two blocks were estimated to be over half built, the third and fourth much less so, and the debtor had no cash in its bank accounts, per the First Report of the Receiver, Dec. 5, 2024, paras. 2.0.1–2.0.3.

The decision to build

The receivership opened on a question the receiver and DUCA spent the first months of it working through: complete the project, or sell it as it stood. In early 2025 DUCA said it would fund completion. On January 27, 2025 the receiver sent a request for proposals to two candidates — 59 Project Management Inc., which had already winterized the site with tarps, air barriers and waterproofing membranes over the exposed roof sheathing, and Fusioncorp, which had been the builder before the receivership. Fusioncorp was selected on April 1, 2025, on its familiarity with the project, its experience with Belleville trades, its acceptability to Tarion Warranty Corporation, its stated ability to finish by April 30, 2026, and fees and a schedule DUCA would accept, per the Second Report of the Receiver, Apr. 30, 2025, paras. 3.0.1–3.0.4.

The structure the court approved on May 14, 2025 was a completion agreement and a fresh CCDC 5B construction management contract — a new contract within the meaning of the Construction Act, not a continuation of the two contracts Fusioncorp had held with the debtor, which the receiver disclaimed. Fusioncorp's fee was $439,793, being 4% of the remaining cost of the work, with $270,000 more if it delivered substantial performance and occupancy permits for every unit by April 30, 2026; hard costs to complete were put at approximately $11 million; and Fusioncorp agreed to discharge the $878,720 lien it had registered against the property on June 4, 2024. Under the CCDC 5B, Fusioncorp retained and paid each subcontractor directly, per the Second Report of the Receiver, Apr. 30, 2025, paras. 4.0.3–4.0.4. The same order raised the receiver's borrowing charge from $1 million to $14 million, per the Fourth Report of the Receiver, Sept. 18, 2026, para. 1.0.5.

The completion agreement contemplated that construction would be finished by April 30, 2026; it was not, and the receiver reported the work behind schedule. The outside occupancy date in every pre-construction agreement of purchase and sale was May 1, 2026, and when occupancy was not given by then, the buyers acquired a right to terminate exercisable between May 2 and June 1, 2026. Thirty-five of them had done so by the time the receiver reported to the court on June 30, 2026, which also disclosed cost overruns then totalling over $1 million and expected occupancy dates of August 21, 2026 for blocks C and D and September 18, 2026 for blocks A and B, per the Third Report of the Receiver, June 30, 2026, paras. 1.0.6, 2.0.6–2.0.7, 2.2.1–2.2.2. On July 8, 2026 Justice Kershman approved that report, the receiver's statement of receipts and disbursements, and the fees of the receiver and Dickinson Wright LLP to May 31, 2026, and raised the borrowing charge to $16,150,000, per the Order of Justice Kershman, July 8, 2026, paras. 2–5. The count of terminating purchasers now stands at thirty-seven, with twenty-four still holding their agreements, per the Fourth Report of the Receiver, Sept. 18, 2026, para. 3.0.3.

What the receiver says it has found so far

The investigation that began on September 2 is not finished. On September 3 the receiver wrote to the trades asking each for "a full statement of account detailing all invoiced rendered and payments received from Fusioncorp to date", so that it could build its own reconciliation of what every trade is owed, per the Fourth Report of the Receiver, Sept. 18, 2026, para. 6.0.3 and App. "E".

What it has so far it puts in three sentences. "The Receiver's initial investigation suggests that the amounts at issue in the Fund Diversion Issue are not insignificant and that there are also concerns about misrepresentations made on Statutory Declarations, which the Receiver and its cost consultant rely upon when approving payments. The Receiver has also identified instances where documents provided in support of payment requests by the Project trades were manipulated. The Receiver has also been advised by certain trades that they were directed by Fusioncorp not to disclose to the Receiver or its consultants that amounts owing to them are in arrears." If its ultimate findings match its initial ones, the receiver says, it intends to bring the matter to the attention of the appropriate enforcement authorities, per the Fourth Report of the Receiver, Sept. 18, 2026, para. 6.0.7. The notice of motion states that during the first week of September the receiver learned that certain funds it had paid Fusioncorp to satisfy amounts owed to subcontractors and trade suppliers "had been diverted by Mr. Ainis", per the Notice of Motion, Sept. 18, 2026, para. (y).

The agreement that keeps the builder on site

The CCDC 5B lets the receiver terminate Fusioncorp for default, and the receiver has not done that. What it asks the court to approve instead is an agreement dated September 15, 2026 among the receiver, Fusioncorp and Mr. Ainis in his personal capacity, signed for the receiver on September 17. The agreement appoints three delegates already running the job day to day, Blair MacNeil, Chris Scott and Nuno Sousa, to complete Fusioncorp's obligations; requires every supplier invoice to go to the receiver promptly on receipt; bars any payment to a subcontractor without Mr. MacNeil's written approval; and routes all amounts owing to the trades listed in its schedule from the receiver to Fridmar Professional Corporation, Fusioncorp's counsel, in trust, to be released to each trade on the receiver's written direction. Mr. Ainis is to sign the outstanding Silkstone contract, hand over Fusioncorp's banking records and whatever else the receiver asks for to reconcile what the trades are owed, and otherwise "will have no further role in the Project and will not communicate further with any subcontractors or suppliers". The schedule of trades runs to thirty-one contracts, from framing and masonry to railings, terrazzo and appliances, per the Project Completion Agreement, Sept. 15, 2026, paras. 2–8 and Sch. "A" (Fourth Report, App. "F").