Valard Construction Ltd. v. Bird Construction Company

(Alberta) (Civil) (By Leave)




Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Trusts and Trustees — Construction law — Labour and material payment bond — Whether a party named as Obligee in a labour and material payment bond has a fiduciary obligation to take reasonable steps to notify beneficiaries and potential beneficiaries about the bond’s existence?

Bird Construction Company, a general contractor on an oilsands project, hired a subcontractor. The subcontractor hired Valard Construction Ltd. Neither Bird Construction Company nor the subcontractor notified Valard Construction Ltd. that the subcontractor had obtained a labour and materials payment bond. The bond named Bird Construction Company as the Obligee. The subcontractor failed to pay Valard Construction Ltd.’s invoices. Valard Construction Ltd. did not notify Bird Construction Company of its payment dispute with the subcontractor until after a deadline for filing a claim set out in the bond had passed. When advised of the non-payment, Bird Construction Company informed Valard Construction Ltd. about the bond. Valard Construction Ltd. submitted a claim to the surety but the surety refused to pay the claim because the deadline for making a claim had passed. Valard Construction Ltd. commenced an action against the surety, added Bird Construction Company as a defendant, and then pursued the action only against Bird Construction Company. Bird Construction Company applied for summary dismissal.