Contractor Liable To Flooring Subcontractor For Failure To Provide Proper Sub-Floor

An owner is obliged to provide the contractor with proper access to the site for the performance of the work. That principle of construction law is well known. What is less well appreciated is that the contractor has the same or similar obligation to the subcontractor. And this obligation has an important ingredient to it: while a construction project is a dynamic process, the contractor must nevertheless provide the work space to the contractor in a condition in which the subcontractor can perform its work.

In McCabe v. Finn Way General Contractor, the Ontario Superior Court recently applied this principle to a general contractor and a flooring subcontractor. The court found that the sub-flooring was not in a condition which was fit for the installation of the flooring. The court held that it was the general contractor’s obligation to install the sub-flooring so that the flooring could be installed. While the subcontractor made efforts to install the flooring, the subcontractor ultimately refused to further proceed unless the sub-flooring was fixed. When the contractor told the subcontractor to “pick up your tools”, the subcontractor took that instruction as a termination of the subcontract.

The Principle

The court stated the principles in a clear fashion:

It is a principle in construction law….that a contractor must present to a subcontractor a project site capable of receiving the scope of the subcontractor’s work, in order to be in a position to tax the subcontractor with default for failure to perform…… The same principles apply whether the relationship is between owner and contractor or between contractor and subcontractor….Put positively, it stands as an implied term in construction contracts that performance by a subcontractor depends upon the proper performance by a contractor in ensuring that the worksite is properly prepared to receive the subcontractor’s work. Failure by the contractor to ensure this condition precedent will represent a breach of the contract by the contractor that allows the subcontractor to terminate the contract and sue for damages…”

The application of the Principle

The court then showed how the principle should be applied to the facts of the case:

  1. The specification showed the preparatory work that must be done before the floor was installed.
  2. The installation of the sub-floor was the contractor’s and not the sub-contractor’s responsibility, and this was admitted by the contractor.
  3. The evidence demonstrated that the deficiencies were with the sub-flooring, not the flooring, and the contractor knew this.
  4. The guidelines of the flooring material supplier demonstrated that the problem was with the sub-floor.

The court concluded that the contractor had was responsible for allowing a defective sub-floor to hinder the [subcontractor’s] ability to install his flooring in a workmanlike manner, and refused to relieve the plaintiff of his warranty over the work that formed the scope of his contract,” and had thereby made it impossible for the subcontractor to fulfill its responsibilities under the subcontract. Accordingly, it was the contractor which thereby breached the subcontract, not the subcontractor who walked off the job in those circumstances.


This decision provides a clear statement of the principle that a contractor – just like an owner – must provide the construction site to the subcontractor in a condition in which the subcontractor can perform its work. This nature of the contractor’s obligation may be more complicated than the obligation of the owner. Unless the owner is itself doing some of the work, the owner’s obligation is largely static and involves the delivery of the site to the contractor at the beginning of the project in an unobstructed condition.

The contractor faces a more difficult challenge for two reasons.

First, its obligation to the subcontractor is a dynamic one as the project progresses. As the contractor may have its own forces on the job, and will likely have several subcontractors, the contractor has an ongoing responsibility to ensure, from time to time and from subcontractor to subcontractor, that the work space for one subcontractor – in this case the flooring contractor – is ready for the subcontractor to work on.

Second, its obligation may be multi-layered. The job and material specifications may dictate an order in which the work must be done. The contractor will have to determine which contractor is to perform which work, and in what order.

Coordinating the work-cycle and specification-cycle order of work may not be an easy job, but it is the essence of good contracting. It is also the essence of contractual performance. As this case demonstrates, when the contractor does not coordinate the project and then refuses to deal with the problem, then it is the contractor which repudiates the subcontract, not the subcontractor which refuses to continue to work.

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed. chapter 4, part 2(b) and 7(d)(ii)(B), chapter 7, part 6(c) and (d) and chapter 12, part 6.

McCabe v. Finn Way General Contractor, 2015 CarswellOnt 19200, 2015 ONSC 7557

Building contracts – subcontracts – availability and condition of site

Thomas G. Heintzman O.C., Q.C., FCIArb                                          March 1, 2016


Ontario Court Of Appeal Holds That The Doctrine Of Mistake Does Not Apply To A Tender

In Asco Construction Ltd. v. Epoxy Solutions Inc., the Ontario Court of Appeal recently held that the doctrine of mistake did not apply to an invitation to tender. In doing so, the court provided a useful reminder of the limited circumstances in which the law of mistake can apply to building contracts.


Asco was hired by the City of Kingston to renovate a theatre. Epoxy was the successful bidder for the subcontract work to install flooring. Epoxy’s bid was based on a sketch provided by Asco during the tender process. The sketch depicted the elevations of the theatre. After the bid was accepted, but before commencing its work, Epoxy’s surveyor found that the elevations in the survey were inaccurate. Epoxy asked for an increase in the contract price which Asco refused, insisting that the work be done in accordance with the contract and that any adjustment to the price could be made later. Epoxy refused to do the work without an assurance that the contract price would be adjusted. Asco sued for breach of contract and damages and Epoxy counter-claimed for loss of profits.

The trial judge found that the error in elevation was the contractor’s fault and awarded damages in favour of Epoxy. On appeal, the Divisional Court found that the contract between the parties was void for mistake. Epoxy appealed to the Court of Appeal.

Decision of the Ontario Court of Appeal

For three reasons, the Ontario Court of Appeal held that the doctrine of mistake could not apply.

First, the trial judge had held the mistake was the fault of Asco. The Court of Appeal held that a “party at fault cannot rely on its own mistake to avoid a contract.” Accordingly, the doctrine of mistake could not apply.

Second, Asco’s tender documents represented “an implied representation to compliant bidders that the work described in the tender documents could be built as described. Those bidders are entitled to rely upon the accuracy of design information prepared by the owner or its engineers. A bidder does not have to duplicate design and analysis prior to submitting a bid.” In arriving at this conclusion, the court relied upon the decision of the Supreme Court of Canada in Edgeworth Construction Ltd. v. N.D. Lea & Associates Ltd., [1993] 3 S.C.R. 206.

Third, Asco could not rely on the doctrine of mistake because, “by asserting its claim for damages against [Epoxy], [Asco] elected to affirm the contract and thereby disentitle itself from relying on the doctrine of common mistake.”


This decision re-affirms the narrow application – or perhaps inapplicability – of the doctrine of mistake to the tender process. When a contract is made through an invitation to tender, it is only in very unusual circumstances that one party can assert to the other that it was mistaken about the contract. The parties have explicitly stated the basis of the contract, in either the invitation to tender or the response (being the bid) to that invitation. In those circumstances, the existence of a mistake seems very improbable. Either the tender and the bid have made the resultant contract clear. Or one of the parties is responsible for any mistake. In either event, the contractual doctrine of mistake cannot apply. Any difficulties in interpreting the invitation and the bid do not mean that the doctrine of mistake applies.

However, the Court of Appeal’s second proposition – that the invitation to tender contains an implied statement that the work can be built in accordance with the tender documents – seems more problematic. The Supreme Court of Canada stated that proposition in Edgeworth Construction, but where does that principle come from, and what is its ambit? The traditional rule is that an owner does not represent that a work can be built in accordance with its proposal and that a contractor takes on the “buildability” risk and must itself determine that the work can be built in accordance with its bid. Does the use of the tender process eliminate that traditional rule?

The decision in Asco v. Epoxy may reflect a general proposition that tendered contracts contain a representation that the project can be built as described in the invitation to tender. If it does, then it represents a wake-up call for owners and contractors issuing those invitations, and the consultants preparing the plans and specifications used in those invitations. They may wish to insert a specific warning into the invitation to tender that there is no representation that the building can be built as shown in the attached plans and specifications, and that it is up to the tendering contractor or subcontractor to determine that issue. If there is no such warning then the result in Asco v. Epoxy may well apply.

Asco Construction Ltd. v. Epoxy Solutions Inc., 2014 CarswellOnt 9200, 2014 ONCA 535, 242 A.C.W.S. (3d) 76

Building Contracts – Tenders – Subcontracts – Implied Representations and Conditions

Thomas G. Heintzman O.C., Q.C., FCIArb                                           September 14, 2014





When Is The Main Building Contract Incorporated By Reference Into The Subcontract?

Most standard form building contracts provide for the incorporation of the main contract into the subcontract.  For instance, GC 3.7.1 of the CCDC 2 Stipulated Price Contract requires the contractor to incorporate the terms of that contract into all agreements with subcontractors and suppliers.  But what effect does an Incorporation by Reference clause in the subcontract have?  In 1510610 Ontario Inc. v. Man-Shield (NOW) Construction Inc, the Ontario Superior Court recently held that it does not mean that an obligation to post security for lien claims contained in the main contract is incorporated into the subcontract.

The Background

The main contract between the owner and Man-Shield required Man-Shield to post security for and discharge any liens that were registered.  Man-Shield entered into a subcontract with 1510610.  The subcontract referred to the main contract as “forming or by reference made a part of this Subcontract, insofar as applicable, generally or specifically, to the labour and materials to be furnished and work to be performed under this Subcontract.”  The subcontract stated that, in the event of any discrepancy between the subcontract and the main contract, the terms and conditions of the subcontract were to apply.

Man-Shield had asked 1510610 to sign a subcontract which contained an express provision requiring 1510610 to post security if its sub-trades liened the project, and 1510610 had refused to execute that contract.

When liens were filed by, among others, a sub-trade of 1510610, the owner demanded that Man-Shield provide security and discharge those liens, and Man-Shield did so.  Man-Shield then applied to the court for an order requiring 1510610 to take over this responsibility and post security to replace the security provided by Man-Shield with respect to the lien filed by the sub-trade of 1510610.  The Ontario court dismissed that application.

The Ontario court held that “the extent to which the terms of a principal contract are incorporated by reference into a subcontract is a question of construction of the subcontract.  The mere existence of an incorporation by reference clause in the subcontract did not automatically incorporate everything in the main contract.”

The court held that, for such a significant obligation as providing security for liens to be incorporated into the subcontract, more precise language was necessary.  In arriving at this conclusion, the court particularly relied upon the fact that 1510610 had been requested, and had refused, to execute a contract containing just such an obligation; and the fact that the incorporation by reference provision was prefaced with the words “insofar as applicable, generally or specifically to the labour and materials to be furnished and work to be performed under this Subcontract.”  In light of these facts, the court was not satisfied that the parties intended the lien security obligation in the main contract to be incorporated into the subcontract.

This decision highlights the need for parties to building contracts to carefully consider what they intend by an Incorporation by Reference clause.  These clauses are dangerous for subcontractors because they may impose unforeseen obligations arising from the main contract which they had no part in negotiating.  Courts have been sensitive to this issue and have been reluctant to apply these clauses, holus bolus.  This reluctance is clearest when the subject matter is not directly related to the physical prosecution of the work.  In other circumstances, the courts may insist upon objective proof that the parties really intended such incorporation.  The Man-Shield decision is just a recent example of that reluctance.

See Heintzman and Goldsmith on Canadian Building Contracts, 4th ed., Chapter 7, Part 1

Construction Contracts   –   Subcontracts   –   Interpretation  –   Incorporation by Reference

1510610 Ontario Inc. v. Man-Shield (NOW) Construction Inc, 2012 ONSC 302

Thomas G. Heintzman O.C., Q.C., FCIArb                                                                                        April 4, 2012