When must an obligee tell subcontractors a labour and material payment bond exists? Valard v. Bird (2018 SCC 8), CCDC 222-2024 and provincial rules.
Education only / verify at source / not legal advice. This guide explains a 2018 Supreme Court of Canada decision on labour and material payment bonds, the 2024 change to the standard CCDC 222 bond that followed it, and the provincial rules on asking about a bond. Global Guarantors publishes industry education. We aren't a surety, broker or law firm, and we don't file claims. The bond actually issued, the statute that applies and the facts of your project always control.
Start here: Surety 101 · Surety vs insurance and indemnity
A labour and material payment bond protects the people who supply work and materials to a construction project. If the bonded contractor doesn't pay them, they can claim against the surety. But a payment bond claim almost always carries a short, strict notice deadline. A subcontractor or supplier that doesn't know a bond exists can't give that notice, and once the deadline passes, the claim is usually gone.
So who has to tell them? For decades, the usual answer in Canadian construction was that nobody had to: claimants were expected to ask. In Valard Construction Ltd. v. Bird Construction Co., 2018 SCC 8, decided February 15, 2018, the Supreme Court of Canada said that answer is too simple when the bond uses a trust. A general contractor that held a payment bond as trustee, filed it in its office and told no one was liable to an unpaid claimant that missed the bond's 120-day notice period (2018 SCC 8, paras. 2, 29–32).
This guide focuses on disclosure and the trust. For claim mechanics, see our payment bond claim guide for subcontractors and suppliers. For performance, payment and bid bonds generally, start with our contract surety guide.
A payment bond is a contract among the principal (the contractor whose payments are guaranteed), the surety and the obligee (the owner or general contractor that required the bond). The unpaid subcontractors and suppliers it protects are not parties to it, and under the traditional third-party beneficiary rule a non-party can't enforce a contract.
As Justice Karakatsanis explained in Valard, modern labour and material payment bonds "frequently use trust language" to solve that problem: the obligee holds the right to claim on the bond as trustee for future claimants, who sue as beneficiaries (2018 SCC 8, paras. 43, 53).
Some legislatures gave claimants a direct right of action instead. The Surety Association of Canada (SAC) names Ontario, Manitoba and British Columbia as jurisdictions with "legislative language which explicitly allows a Claimant to claim against the bond directly" (SAC, CCDC Bond Forms 2024). Ontario's Construction Act s. 85.2(1) gives anyone whose payment is guaranteed by a labour and material payment bond "a right of action to recover the amount of the person's claim, in accordance with the terms and conditions of the bond, against the surety and the principal" (Construction Act, R.S.O. 1990, c. C.30). British Columbia's Law and Equity Act s. 48 gives a claimant "a cause of action against the surety named in the bond" when the principal defaults (R.S.B.C. 1996, c. 253).
The difference matters. Valard is a trust case, and the duty it describes is a trustee's duty. Our CCDC 222 – 2024 labour and material payment bond card summarizes how the current standard form handles the trust.
From Justice Brown's majority reasons (2018 SCC 8, paras. 3–9):
The trial judge dismissed Valard's action, finding no duty to notify and that a "simple standard inquiry" by Valard would have been more reliable (2015 ABQB 141; paras. 10–11). A majority of the Alberta Court of Appeal agreed that there was no duty "unless and until a clear and unequivocal request for information about the bond is made," noting Valard could have asked under s. 33 of the Builders' Lien Act; Justice Wakeling dissented (2016 ABCA 249; paras. 12–13).
The Supreme Court allowed the appeal and remitted damages to the trial judge. Justice Brown wrote for the majority (McLachlin C.J. and Abella, Moldaver and Rowe JJ. concurring), Justice Côté concurred in the result, and Justice Karakatsanis dissented; the Surety Association of Canada intervened (official report). So Valard won six to one, but only five judges adopted the broader rule that a trustee may have to take positive steps.
The bond said nothing about telling claimants, but that was "not, however, fatal to Valard's appeal," because the general law of trusts "continues to govern where the trust instrument is silent" (para. 15). The test is in paragraph 2: "In general, wherever a beneficiary would be unreasonably disadvantaged not to be informed of a trust's existence, the trustee's fiduciary duty includes an obligation to disclose the existence of the trust." Whether a disadvantage is unreasonable depends on "the nature and terms of the trust and the social or business environment in which it operates," and on the beneficiary's entitlement (para. 19).
Valard met it: "[t]he expiry of the 120-day notice period before Valard learned of the bond effectively prevented it from enforcing the trust" (para. 20).
The standard "is not perfection, but rather that of honesty, and reasonable skill and prudence" (para. 26). Since Bird could not know every future claimant, its duty extended "not to ensuring that every potential beneficiary knows of the trust, but only to taking reasonable steps to that end" (para. 27). Here, "Bird could have satisfied its duty to inform beneficiaries of the trust by posting a notice of the bond in its on-site trailer," at a cost that "would have been negligible," and that kind of notice "is already statutorily required on public worksites in Alberta" (para. 28).
The majority limited the reach of this. Where bonds are common in a sector, "it may well be that very little, or even nothing, will be required on the part of a trustee." But "Bird did nothing. It filed the bond offsite, did not post it, and told nobody about it," and where bonds were uncommon, "something more than nothing was required" (para. 29).
Valard was entitled to "the sum that it could have obtained under the terms of the trust had it been aware of its right to claim thereunder," with the amount remitted to the trial judge because the record didn't show what remained on the bond (para. 32). We have not found a public decision on the remitted damages.
Justice Côté agreed with the dissent that there is generally "no proactive duty" (para. 33), but accepted that "a trustee has an equitable obligation to accurately answer all requests from potential claimants for information pertaining to the existence and particulars of any labour and materials payment bond" (para. 39).
On August 10, 2009, Langford emailed Bird's project manager, copying Valard, about a "serious problem" paying Valard's invoices, ending "Chris let me know how you think we should proceed." Bird replied to Langford only, dropping Valard from the chain (paras. 35–36). For Justice Côté, the email "effectively amounted to such a request," since "it is not necessary that a potential claimant articulate a particular set of words before being entitled to information about any existing bond from the trustee" (para. 39). Valard was still inside its 120-day window then (para. 41).
Justice Karakatsanis wrote that "for over 45 years, the understanding and practice in the construction industry in Canada has been that the trustee of a labour and material payment bond is not required to take steps to notify potential claimants of the existence of the bond" (para. 64), and that "it is sufficient if the trustee responds to any enquiries about a bond" (para. 56). Even so, she did not rule out that a trustee "may breach its equitable duty if it receives actual notice of the claim within the time permitted for a claim under the bond and does not advise the claimant of the bond" (para. 66).
None of the three sets of reasons suggests a trustee may stay silent, or answer inaccurately, when asked.
CCDC describes CCDC 222 – 2024 as a "standard surety labour and material payment bond form guaranteeing that the Contractor will satisfy all labour and material payment obligations incurred in performing the contract" (CCDC). In the public specimen published by SAC (CCDC 222 – 2024 specimen), described rather than reproduced:
SAC is explicit: "In the updated 2024 version, a new Paragraph 4 has been added to nullify the fallout from the Valard decision," aiming "to re-establish the principle that any trust created under the bond will be a 'bare' trust" (SAC, CCDC Bond Forms 2024).
Three cautions. The Valard majority relied on the general law where "the trust instrument is silent" (para. 15); the 2024 form isn't silent, but we have not found a reported decision testing whether section 4 fully displaces the duty. Older 2002-edition bonds are still specified on some projects. And while section 4 disclaims any obligations or duties to Claimants, it doesn't mention enquiries specifically, and the statutory information rights below apply whatever the bond says.
Ontario public contracts use Form 31, prescribed by O. Reg. 303/18 for bonds under s. 85.1 of the Construction Act. Form 31 contains no trust clause; claimants rely on s. 85.2 (O. Reg. 303/18). See our Ontario Form 31 labour and material payment bond card. Valard did not decide whether any disclosure duty applies to a non-trust bond.
These rights don't depend on a trust, and they apply whatever the bond says about notification.
| Province and section | Who can ask, and what they get | Deadline and remedy |
|---|---|---|
| Ontario, Construction Act s. 39 | Lien claimants and Part II trust beneficiaries: "a copy of any labour and material payment bond," from the owner or contractor (the contractor's bond) or from the contractor or a subcontractor (subcontract bonds) | "Not to exceed twenty-one days." Damages for failure or a knowing or negligent mis-statement (s. 39(5)); court order (s. 39(6)) |
| British Columbia, Builders Lien Act s. 41 | Lien holders and trust beneficiaries: "particulars of any labour and material payment bond posted by the contractor with the owner," from the owner. The owner can ask about subcontract bonds (s. 41(2)) | 10 days (s. 41(3)). Liable for "any resulting loss or damage" (s. 41(4)) |
| Alberta, Prompt Payment and Construction Lien Act s. 33 | Lienholders, trust beneficiaries, and contractors or subcontractors on the project: the contract and a statement of accounts (not the bond itself) | At the demand or within 6 days. Liable for loss from refusal, neglect or a false statement (s. 33(4)) |
Sources: Ontario Construction Act s. 39 (e-Laws); BC Builders Lien Act s. 41 (current to October 13, 2026); Alberta Prompt Payment and Construction Lien Act s. 33 (current as of April 1, 2025).
Ontario's 21-day and BC's 10-day periods fit inside a 120-day bond notice window only if the request goes out early. Alberta's s. 33, the successor to the Builders' Lien Act section in Valard, speaks of contracts and accounts, not bonds.
Under Alberta's Public Works Act s. 17(1), every contractor "shall, where practicable, display and keep displayed in a conspicuous place on the public work" a copy of the claims section and, "where a labour and material payment bond has been provided to the Minister, a copy of the bond." Under s. 17(2), whether a bond exists and its particulars "are to be considered public information" (Public Works Act, RSA 2000, c P-46, current as of September 17, 2026). Alberta Transportation's specifications have the contractor display the bond on a site bulletin board, in plastic sleeves, for the duration of the contract (Section 00639; Section 00616).
We found no equivalent posting rule in Ontario's Construction Act or O. Reg. 303/18 and 304/18 (O. Reg. 304/18). In Ontario, the route is the s. 39 request.
As Justice Karakatsanis described it, the federal Financial Administration Act "assigns to claimants the right of the Crown to recover under a labour and material payment bond," and the federal bond "does not provide that the Crown is a trustee for potential claimants" (para. 54). Check the solicitation's security terms on any federal job.
In Valard the trustee was a general contractor holding a subcontractor's bond; the reasons treat owners and general contractors alike as possible trustees (paras. 21, 43).
Public owners can also use our guide to accepting and verifying bonds.
The safest reading of Valard isn't that someone must tell you about the bond. It's that you should never need to be told.
The surety wasn't the defendant; Valard sued the obligee. Nothing in Valard extended the 120-day period or made the surety liable for late notice. SAC treats section 4 of CCDC 222 – 2024 as the industry's answer, so brokers placing older or modified forms should know whether that language is present. Obligees may ask what "reasonable steps" look like; posting and written disclosure are contract administration, not something the bond guarantees.
General education, not legal advice. Use it as a set of questions for your surety professional or counsel.
Owners and general contractors holding a bond
Subcontractors and suppliers
Does Valard apply to a bond with no trust clause? The decision doesn't say. Valard is about a trustee's duty, and Ontario's Form 31 and the federal bond described in the dissent don't make the obligee a trustee. Claimants under those bonds rely on statutory rights of action and information rights, so asking for the bond early still matters.
Was the decision unanimous? No. Five judges formed the majority in reasons by Justice Brown; Justice Côté concurred in the result on narrower grounds; Justice Karakatsanis dissented.
Did CCDC 222 – 2024 overrule Valard? A bond form can't overrule a court. SAC says section 4 was added "to nullify the fallout from the Valard decision." We did not verify any reported decision on its effect as of October 21, 2026.
How can an Ontario subcontractor get a copy of the bond? By written request under s. 39 of the Construction Act, if it has a lien or is a beneficiary of a Part II trust. The answer is due within a reasonable time, not to exceed twenty-one days.
Retrieved or confirmed October 21, 2026 (PT).
