[co-author: Michael Low – Student-at-Law]
Alberta Court of Appeal confirms no duty to disclose existence of labour and material bond unless askedLabour and material payment bonds (L&M Bonds) serve an important purpose on a construction project by providing security for subcontractors and suppliers and by reducing the risk of builders’ liens.
In Valard Construction Ltd v Bird Construction Company, 2016 ABCA 249 [Valard], a majority of the Alberta Court of Appeal confirmed that, unless asked, an owner/trustee under an L&M Bond has no duty to disclose its existence to subcontractors or suppliers.
BackgroundIn Valard, the respondent, Bird Construction Company (Bird), was the general contractor on a construction project and it had required its subcontractor, Langford Electric Ltd. (Langford), to obtain an L&M Bond. The appellant, Valard Construction Ltd. (Valard), a subcontractor to Langford, was not fully paid by Langford and was not initially aware of the existence of the L&M Bond. After later discovering that an L&M Bond existed, its attempted claim was denied because the notice period for making a claim under the bond had expired. Valard argued that Bird had a positive duty to inform Valard of the L&M Bond and that Bird breached that duty by failing to disclose its existence. Since Langford was insolvent...
