Labour And Material Bond Claimants May Gain Further Rights

In Canada, the law imposes an obligation upon owners and general contractors named as "trustee" in a labour and material payment bond ("L&M bond") to provide a copy of the L&M bond upon request by a potential claimant. The Supreme Court of Canada has granted leave to appeal where they will decide whether a trustee named in an L&M bond must proactively inform potential claimants of the existence of the L&M bond failing which they can be held liable to claimants who unwittingly lose their right to claim under the bond. The decision being appealed to the Supreme Court of Canada is from the Alberta Court of Appeal in Valard Construction Ltd v Bird Construction Company.

A conventional trust imposes onerous obligations upon trustees to act in the best interests of the trust beneficiaries. A typical L&M bond provided by a subcontractor to a general contractor includes language suggesting a trust: