CASE STUDY

Naylor Group Inc. v$.$ Ellis$-$Don Construction Ltd$.,2001$ SCC $58$

The defendant, Ellis$-$Don Construction Ltd$.,$ submitted a bid for the prime contract for the construction of a hospital addition that included the plaintiff's bid for the subcontract for the electrical work on the project. Ellis$-$Don's bid on the hospital project was successful. Meanwhile, the Ontario Labour Relations Board $($OLRB$)$ ruled that Ellis$-$Don could not subcontract to companies that were not affiliated with the International Brotherhood of Electrical Workers $($IBEW$).$ The plaintiff's employees were members of a different union and accordingly Ellis$-$Don claimed it was relieved of any obligation to award the subcontract to the plaintiff as a result of the OLRB decision that required it to use IBEW electricians on its projects. The plaintiff sued Ellis$-$Don for damages for breach of contract. Ellis$-$Don argued no contract had been put in place or$,$ alternatively, that any such contract was frustrated by the supervening event of the OLRB decision.

The court determined there had been no "supervening event" in the required sense, and stated the doctrine of frustration is applicable where, "a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes 'a thing radically different from that which was undertaken by the contract."$\text{'}$