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during which it would have benefitted
from it.
After Valard completed its work,
Langford failed to pay some of its
invoices. Accordingly, on March 9, 2010,
Valard sued and obtained default judg-ment
against Langford for $660,000. At
that time, Langford was insolvent. In
April 2010, Valard learned of the bond,
but by then the time for making a
claim under it had expired. Valard then
sued Bird, arguing that it had a duty to
inform Valard of the bond’s existence,
its terms and the right of action pro-vided
thereunder.
Both the trial court and the appel-late
court dismissed Valard’s claim,
holding that Bird had no duty to
inform any potential claimant about
the existence of the bond. Those deci-sions
held that the purpose of the
bond was to protect general contrac-tors
and that subcontractors had their
own duties to make inquiries about
the existence of bonds. Since Valard
made no such inquiries, the courts
held that Valard was the author of its
own misfortune.
The majority of the Supreme Court
reversed the lower courts’ decisions
and found in favour of Valard. Justice
Brown, writing for the majority, held
that, under conventional trust law
principles, a trustee has a duty to dis-close
to the beneficiaries the existence
of the trust wherever it could be said to
be to the unreasonable disadvantage
of the beneficiary not to be informed
of the trust’s existence. Justice Brown
applied this principle to labour and
material bonds. In the majority’s view,
Valard was unreasonably disadvan-taged
by Bird’s failure to inform it of
the trust’s existence, primarily because
Valard required knowledge of it in
order to enforce it.
The majority also held that because
the oil sands project was not the sort
of project in which labour and mate-rial
bonds were normally used, a duty
to disclose arose in that case. The
majority did accept, however, that for
construction projects in which these
bonds were common, “it may well be
that very little, or even nothing, will
be required on the part of a trustee to
notify potential beneficiaries of the
trust’s existence.”
The majority then went on to dis-cuss
the standard to be met by a trustee
with respect to its duty to disclose. In
this case, Bird had an on-site trailer in
which notices were normally posted
and where Valard was required to
attend daily meetings. The court held
that Bird should have posted a notice
of the bond in its trailer. In failing to do
so, and in failing to do anything to give
notice of the bond, the majority held
that Bird committed a breach of trust.
Two of the judges – Justices Coté
and Karakatsanis – disagreed with
the majority. They held that while Bird
was under an obligation to respond to
questions concerning a bond’s exis-tence,
it had no proactive duty to take
steps to inform potential claimants of
its existence. Justice Karakatsanis, in
particular, looked to the decades-old
convention in the construction indus-try
that trustees under a bond were
under no obligation to inform benefi-ciaries
of a bond’s existence and that
beneficiaries were expected to make
their own inquiries in that regard.
In Justice Karakatsanis’ view, the
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