Legal Blog

Information (2)

Pursuant to section 39 of the Construction Lien Act, contractual parties at the lower rungs of the construction ladder have a right to information relating to construction contracts higher on the construction ladder. S. 39(1) refers to information being supplied by an owner or a general; s. 39(2) refers to information being supplied by a general or a subcontractor.

For example, s. 39(2) applies to a request from a subsub to either its sub or the general dealing with information relating to the subcontract between the general and the sub. S. 39(1) applies to a request from a subcontractor or subsub to the general or the owner dealing with information relating to the prime contract. In each case, the party requesting the information has no knowledge of it.

Can either of the subsections be used to request information of the party with whom the requester has a contract (e.g. Can a sub request information of the general relating to the subcontract? Can a general request information of the owner relating to the prime contract?) These questions were answered in Coastal Steel Construction Ltd. v. Man-Shield (NWO) Construction Inc., a 2015 decision of the Ontario Superior Court of Justice.

Info Type

The usual information to be given is not difficult to provide: names of the parties to the contract or subcontract; state of accounts between the contractual parties; and a copy of any relevant labour and material payment bond. A general must also indicate whether a subcontract has been certified as complete.

The reason for requiring the information to be provided was set out in the decision:

The purpose of s. 39(1) of the Act is to enable lien claimants to obtain information “pertinent to the decision of whether or not to preserve a lien claim or to prosecute a lien action”. The “decision to prosecute” is a dynamic one, and continues throughout the action; the amount that is available for subcontractors is material to their decision as to whether to participate, and how to participate, in the ongoing proceedings.

Other decisions have opined that the information provider should give more than just bare bones information. For example, we would argue that s. 39 is also critical in determining whether there was a breach of trust. In that regard, the information provider should deliver copies of payment applications and a breakdown of payments made.

Overreach

A sub sent two s. 39 requests for information to the general: one asked the general for required information relating to the prime contract; the other asked for information relating to the subcontract between the sub and the general. The general complied with the first request, which was under s. 39(1); it ignored the second request, which was under s. 39(2). The sub brought a motion to require the general to comply with the second request.

Did the sub really need the general to provide information telling the sub that the parties to the subcontract were the general and the sub? The sub knew that. The sub also knew the statement of accounts between the general and the sub. In effect, the sub was attempting to obtain a free discovery of the general’s position.

The motions judge held that the purpose of the section is only to enable a requester to obtain information regarding a contract in which it is not a contracting party. He therefore denied the sub’s motion.
Image courtesy of DuBoix.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.