Legal Blog

Subcontractor’s Motion to Amend it’s Claim Against the City of Kitchener is Dismissed

Ozz Electric Inc. v. Zurich Insurance Co. 2016 Ont SCJ

In addition to commencing an action against the surety under a labour and material payment bond, the subcontractor wanted to amend its claim to add the owner and allege that the owner was liable under the bond to the subcontractor. The judge noted that section 69(1) of the Construction Lien Act allowed a claimant under a bond to sue the surety without the involvement of the obligee/owner. The bond, as is usual, provided that a claimant must indemnify an obligee by reason of any proceeding the claimant commences against the obligee to enforce the bond. Accordingly, the judge dismissed that claim. The subcontractor then wanted to commence an action against the owner for alleged negligence and economic loss. Since the subcontractor had no contract with the owner, the subcontractor had to demonstrate a sufficiently close relationship between the owner and subcontractor to support a duty of care in favour of the subcontractor and that there were no policy considerations to limit that duty. The judge held that the subcontractor had not pleaded facts to support these allegations and dismissed this claim also. Finally, the subcontractor had the audacity to claim against the owner for contribution and indemnity of the claims that the general was making against the subcontractor for deficient workmanship. The judge dismissed that claim as untenable in law because contribution and indemnity can only be sought if the general could have claimed against the owner for the subcontractor’s deficient workmanship and, of course, it could not.

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