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.

Discussion

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

www.heintzmanadr.com

www.constructionlawcanada.com