The Ontario Court of Appeals recently released its judgment in the Kennedy Electric Case. The decision is expected to give rise to debate over the extent to which the supply of certain types of machinery, assembly line and process equipment is lienable.
In any construction tendering process a balance must be struck between ensuring that the process is competitive and yet remains fair to all participating parties. In a recent decision regarding the tendering process, the courts were once again called upon to examine the fairness of the construction tendering process.
Latent defects or deficiencies in buildings may be discovered long after the construction project is complete, thereby potentially exposing parties to indefinite liability. However, the Limitations Act 2002 sets out a new legislative regime, under which a party must commence a lawsuit within 15 years of the act or omission, regardless of when the negligence was discovered.
Within the construction industry there is always a potential tension between a general contractor and a subcontractor regarding the scope of work for which the subcontractor is responsible. If the parties to a contract are unable to resolve a conflict over one party's scope of work, the courts may be called upon to interpret and make the final decision regarding the parameters of a contract.
As the trend towards design-build construction projects continues, questions are being raised regarding the ability of members of a design-build team to make claims against the owner in respect of the owner's actions during the tender stage. The Federal Court of Canada recently reviewed the owner's duties to a design-build team when the owner fails to award the tender to the lowest compliant bidder.
A recent decision by the Ontario Superior Court of Justice examined the reasonableness of a general contractor's objection to and ultimate dismissal of the electrical subcontractor that was initially carried in the general contractor's tender to the owner.
It is an unfortunate reality in the construction industry that bankruptcies can and do occur. An owner, general contractor or subcontractor may become insolvent and be unable to meet its financial obligations. In those circumstances, contractors need to know how best to protect their rights and minimize potential losses.
The Ontario Superior Court has again confirmed that an owner invoking a competitive tender process cannot rely on undisclosed criteria in the awarding of a contract. In this case the owner could not rely on the usual clause giving it discretion not to accept the lowest bid because it had used criteria which were not disclosed in the bidding documents.
An owner in the construction industry often utilizes performance bonds as a form of security to ensure that the general contractor performs its obligations under the construction contract. However, two competing appeal court cases in different provinces have called into question the scope of the bond and the obligations of the bonding company once the general contractor is declared to be in default.
The Divisional Court of Ontario has released a judgment upholding a trial court decision that the installation of an assembly line was not an 'improvement' within the meaning of Section 1(1) of the Construction Lien Act and therefore did not give rise to lien rights.
In light of the complexities associated with many new construction projects, it is common to encounter projects that include both a prime consultant and various sub-consultants. However, this situation recently raised the issue of whether the sub-consultant could avail itself of the limitation clauses contained in the prime contract in respect of the claim against it.
In Canada, owners often utilize performance bonds in the construction industry as a form of security to ensure that the general contractor performs its obligations under the construction contract. However, two competing appeal court cases in different provinces call into question the scope of the bond and the obligations of the bonding company once the general contractor is declared to be in default.
The Ontario Superior Court has held that the installation of a vehicle assembly line at a Ford Motor Company plant did not give rise to lien rights. The court found that the assembly line was independent of the building and capable of removal, even though it was fixed to the floor of the premises.
A 2003 decision by the Ontario Court of Appeal, subsequently noted in several cases, has reiterated the importance of ensuring clarity when drafting indemnity clauses. Where clear wording has been used, the indemnity clause may withstand scrutiny by the court and be given effect.
Recent changes to the Ontario Rules of Civil Procedure are likely to affect the timing of the gathering of documents in construction claims. Under the new rules, a party serving a pleading must provide of copy of every document referred to in that pleading at the time of serving.
Given the complexities and costs that are commonly involved in construction claims and the frequency with which claims arise on construction projects, it is imperative that industry participants be fully aware of likely problems that may give rise to unwanted claims and liabilities.
In A Dynasty Roofing (Windsor) Ltd v Marathon Construction Services the Ontario Superior Court was asked to rule on whether a bidding process resulted in a contract which obliged the contractor to offer the lowest bidder a subcontract at the latter's bid price in the absence of any other reasonable cause to reject the subcontractor.
In Canadian Transit Co v Girdhar the Ontario Superior Court of Justice Divisional Court has gone to great lengths to distinguish between an engineer's obligation to keep confidential information that has been given to him, and the legal relationship that may exist or develop between him and the client.