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ARTICLE · 24 OCTOBER 2022

Urban Mechanical Contracting Ltd. V. Zurich Insurance Company Ltd.

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The construction was to be financed and carried out by the private sector.

CanadaLitigation, Mediation & Arbitration
Andrea S. Levstik
Andrea S. Levstik
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In Urban Mechanical Contracting Ltd. v. Zurich Insurance Company Ltd.,1 the Court of Appeal considered whether, as a matter of law, rescission is available on the basis of fraudulent misrepresentations and collusion – even when doing so would affect the rights of innocent third parties.

The court held that, as a matter of law, the rights of innocent third parties are not an absolute bar to rescission, particularly in cases of fraudulent misrepresentation and where it may be possible to provide restitution in other ways.

BACKGROUND

The case dealt with a public-private redevelopment project with Infrastructure Ontario to construct a new 17-story patient care tower at St. Michael's Hospital. The construction was to be financed and carried out by the private sector. The construction contract was awarded to a subsidiary of Bondfield Construction Company Ltd. through Infrastructure Ontario's procurement process. Bondfield was made the general contractor of the

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