D'Aoust (Paul) Construction Ltd. et al. v. Markel Insurance Co. of Canada, (1999) 120 O.A.C. 243 (CA)

• Judge: Carthy, Doherty and Rosenberg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: December 08, 1998
• Jurisdiction: Ontario
• Citations: (1999), 120 O.A.C. 243 (CA)

D'Aoust Constr. Ltd. v. Markel Ins. (1999), 120 O.A.C. 243 (CA)

MLB headnote and full text

Temp. Cite: [1999] O.A.C. TBEd. MY.063

Paul D'Aoust Construction Ltd. and The Carleton Roman Catholic Separate School Board (appellants) v. Markel Insurance Company of Canada (respondent) and Preston & Lieff Glass Contracts Inc. Bermia Holdings Limited, Bernard Lieff, Edward McGregor and Kenneth Daku (third parties)

(C26322)

Indexed As: D'Aoust (Paul) Construction Ltd. et al. v. Markel Insurance Co. of Canada

Ontario Court of Appeal

Carthy, Doherty and Rosenberg, JJ.A.

May 20, 1999.

Summary:

The Carleton Roman Catholic Separate School Board called for tenders to build a high school. The Board contracted with Paul D'Aoust Construction Ltd. to act as its au­thorized agent. Preston and Lieff Glass Con­tract Inc. (P&L) contracted with the Board to supply and install specialty windows. P&L signed and sealed a performance bond for one-half of the amount of the contract with the Board and Markel Insurance Company of Canada. The Board subsequently advised P&L that it was in default under the agree­ment by not having its workers on the job site. The default having continued for five more days, the Board terminated the contract with P&L and advised Markel. Markel took the position that it was not bound as surety because the principal (P&L) had not delivered the bond to the obligee (the Board). The Board and Paul D'Aoust Con­struction sued Markel.

The Ontario Court (General Division), in a decision reported at 19 O.T.C. 47, held that the action must fail because the bond was not delivered. The Board and Paul D'Aoust appealed.

The Ontario Court of Appeal, Doherty, J.A., dissenting, dismissed the appeal.

Building Contracts - Topic 7522

Performance bonds - Execution - Delivery - A school board called for tenders to build a high school - The Board con­tracted with Paul D'Aoust Construction Ltd. to act as its authorized agent - P&L contracted with the Board to supply and install specialty windows - P&L signed and sealed a per­formance bond for one-half of the amount of the contract with the Board and Markel Insurance Company of Canada - The Board subsequently advised P&L that it was in default under the agreement by not having its workers on the job site - The Board terminated the contract with P&L and advised Markel - Markel took the position that it was not bound as surety because the principal (P&L) had not de­livered the bond to the obligee (the Board) - The Board and Paul D'Aoust Construc­tion sued Markel - The trial judge held that the action must fail because the bond was not delivered - The Ontario Court of Ap­peal affirmed that the bond was not de­livered and delivery was required to make the bond effective - See paragraphs 3 to 11.

Building Contracts - Topic 7581

Performance bonds - Defences of surety - General - [See Building Contracts - Topic 7522 ].

Cases Noticed:

Citadel General Assurance Co. v. Johns-Manville Canada Inc. et al., [1983] 1 S.C.R. 513; 47 N.R. 280; 147 D.L.R.(3d) 593, refd to. [paras. 3, 48].

Helm and Yaren v. Simcoe & Erie General Insurance Co. and Edwards Construction Ltd. (1979), 19 A.R. 326; 108 D.L.R.(3d) 8 (C.A.), refd to. [paras. 6, 67].

Sammon, Re (1979), 22 O.R.(2d) 721 (C.A.), refd to. [para. 6].

Aldgate Enterprises Ltd. et al. v. Pacific Filtration Ltd. et al. (1990), 44 C.C.L.I. 14 (B.C.S.C.), refd to. [paras. 10, 58].

Westburne Industrial Enterprises Ltd. v. Halifax Insurance Co. (1983), 2 C.L.R. 14 (Nfld. T.D.), refd to. [paras. 10, 63].

Kelly v. U.S. Fidelity and Guaranty Co., [1938] 3 W.W.R. 297 (Man. K.B.), refd to. [para. 10, footnote 2].

Friedmann Equity Developments Inc. v. Final Note Ltd. (1998), 112 O.A.C. 253; 41 O.R.(3d) 712 (C.A.), refd to. [para. 11].

Larbonne v. Shore, [1928] 2 D.L.R. 977 (B.C.C.A.), refd to. [para. 72].

Authors and Works Noticed:

Halsbury's Laws of England, vol. 12, para. 1329 [para. 6].

Rasmussen, P.D., Construction Claims in the Context of Bonding, in Insight Infor­mation Inc. (1994), art. 7, p. 22 [para. 5, footnote 3].

Scott, K.W. and Reynolds, R.B., Surety Bonds (1996 Supp.), pp. 2-32, 2-33 [para. 71].

Scott, K.W. and Reynolds, R.B., Surety Bonds (1998 - Rel. 1), pp. 2-14 [para. 5]; 2-33 [para. 17].

Counsel:

Sean Cumming, for the appellants;

Ron Price, for the respondent, Markel Insurance;

Keith McLaren, for the third party, McGregor;

Kenneth Radnoff, for the third party, Daku.

This appeal was heard on December 8, 1998, before Carthy, Doherty and Rosen­berg, JJ.A., of the Ontario Court of Appeal. On May 20, 1999, the decision of the court was delivered and the following opinions were filed:

Rosenberg, J.A. - see paragraphs 1 to 19;

Carthy, J.A., concurring - see paragraph 20;

Doherty, J.A, dissenting - see paragraphs 21 to 83.