Notable Court Cases Involving Sureties Underscore Importance of Impartiality

In a 2021 Q1 Update to The Surety Association, BC Chapter, Chris Schuld outlines two notable court decisions involving sureties, both from the Ontario Superior Court of Justice.

These two cases stress the need for surety providers to maintain an objective, independent perspective if they are to protect their interests in litigation.

Read the full version of Schuld’s 2021 Q1 Update to The Surety Association.

Summary of Cases

Case 1: Schindler Elevator Corporation v. Walsh Construction Company of Canada, 2021 ONSC 283 (CanLII)

In a lawsuit concerning the Women’s College Hospital in downtown Toronto, the elevator company, Schindler, claimed that they were unpaid by the contractors, a partnership of Walsh and Bondfields. The contractors counter-claimed that Schindler’s delay impacts totalled $2.2MIL. The contractor also brought a separate action against Zurich Insurance, which had issued a performance bond on behalf of Schindler.

During a 5-week trial, the surety provider, Zurich, proved remarkably successful in winnowing down the 2.2MIL claim to a 51K exposure, and ultimately was not obligated to indemnify the contractors. Although Zurich was successful, this case serves as a reminder to surety providers that the mere threat of litigation risk can pull a surety into a complex trial, with much resting on the testimony of a single independent adjuster.

Case 2: Man-Shield (NWO) Construction Inc. v. Tarion Warranty Corporation et al, 2021 ONSC 144 (CanLII)

In a case involving a leaky parkade beneath high-rises in Thunder Bay, Tarion was engaged in addressing the warranty work. Tarion made demands on the bonds from Intact Insurance to recover the cost of repairing the leaks.

The contractor, Man-Shield (NOW) Construction Inc., sought a court order enjoining Tarion from calling on the bonds. This attempt at an injunction was ultimately doomed, and the contractor was stuck paying a $25,000 costs award.