Unpaid Subcontractors Beware

Labour 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.

Background

In 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...