What owners and contractors should know about agency clauses after Omega Formwork Inc. v. 778938 Ontario Limited, 2026 NSSC 316
Agency provisions are a common feature of construction management contracts, particularly those based on the CCDC 5A model, where the construction manager administers the project on the owner’s behalf but does not hold the trade contracts. These provisions are often treated as administrative language that simply allows the construction manager to perform certain project functions for the owner. A recent Nova Scotia Supreme Court decision suggests they may have more significant consequences.
In Omega Formwork, the Court held (at the pleadings stage) that an owner could advance a fiduciary duty claim against its construction manager based on a contractual provision authorizing the construction manager to act as the owner’s agent.[1] The ruling does not determine liability, but it shows that agency language may support obligations beyond the contract itself.
Two Construction Management Models
Not every construction management project raises this issue, and much depends on which model the project follows. Under CCDC 5A (Construction Management Contract for Services), often described as a “construction manager not at risk” model, the construction manager advises the owner and administers the project, while the owner contracts directly with the trade contractors. Because the construction manager acts on the owner’s behalf, the most recent published version of CCDC 5A includes agency language in GC 2.1.4. Under CCDC 5B (Construction Management Contract for Services and Construction), the construction manager holds the trade contracts itself. CCDC 5B – 2025 does not merely omit agency language; GC 1.5.2 expressly provides that the construction manager “shall be deemed not to assume any duties nor responsibilities as agent of the Owner.” The fiduciary risk in Omega Formwork is therefore more likely to arise on CCDC 5A and other “construction manager not at risk” projects, although the answer will always turn on the wording of the specific contract, including any supplementary conditions.
The Clause
The decision quotes the clause as alleged in the owner’s pleading, rather than from the contract itself:
“[The Construction Manager] shall have authority to act as agent of the Owner only to the extent provided in the Contract Documents.”
The novelty is not the general proposition that agents can owe fiduciary duties, which is well established.[2] It is the Court’s willingness to treat a construction management agency clause as capable of supporting an independent fiduciary duty claim.[3]
How the Court Connected Agency and Fiduciary Duty
The Court confirmed that agency is a recognized category of fiduciary relationship.[4] However, the existence of an agency clause does not define the content of every resulting obligation; the contract creating the relationship determines the scope of the agent’s authority and any corresponding fiduciary duties.[5]
Because the contract expressly appointed the construction manager as the owner’s agent, the Court held that it was open to the owner to plead that the construction manager owed fiduciary duties, including duties to act in the owner’s interests, avoid conflicts of interest, and disclose material information.[6] The claims for breach of the duties of disclosure and to act in the owner’s best interests were found sustainable on the pleadings.[7] The conflict-of-interest claim, however, was not sustainable as drafted. The owner had not pleaded the material fact on which it relied: that the construction manager aligned itself with the trade contractors against the owner.[8]
The Court emphasized that not every claim arising from a fiduciary relationship gives rise to a claim for breach of fiduciary duty, and that a breach of contract does not, by itself, entail a fiduciary breach.[9] A plaintiff must identify which conduct is alleged to breach which fiduciary obligation; a defendant “should not have to guess”.[10] The Court also recognized that an agent may owe a “true” duty of disclosure that operates independently of any conflict of interest.[11] As a result, at the pleading stage the owner did not need to allege that the construction manager put its own interests ahead of the owner’s to sustain the disclosure claim.[12]
Why the Decision Matters for Construction Projects
Construction managers occupy a unique position on a project. On “construction manager not at risk” projects in particular, they administer aspects of the project on the owner’s behalf while managing risks that may affect their own interests. On “construction manager at risk” projects, by contrast, the construction manager typically holds the trade contracts itself and acts more like a general contractor, making an agency relationship less likely unless the contract expressly creates one.
The decision shows that a dispute over project administration may extend beyond a conventional breach of contract claim. Where an agency relationship exists, as is more common on CCDC 5A and other “construction manager not at risk” projects, the construction manager may also face allegations of equitable duties, including loyalty and disclosure, in addition to the obligations expressly set out in the contract.[13]
The decision therefore raises an important question for owners and construction managers: does the agency language merely confer administrative authority, or does it also create a fiduciary relationship?
The appropriate drafting response will depend on the role the construction manager is intended to perform and the degree of discretion the owner expects to confer. The following points can help the parties align the contract language with that intended relationship.
Practical Takeaways
Parties should first confirm whether the contract, including any supplementary conditions, contains agency language and, on CCDC 5B – 2025, that GC 1.5.2 has not been deleted or overridden by amendment. Construction managers should consider whether agency authority is needed at all and, if it is, define its scope narrowly, since the contract may determine both the extent of the agency relationship and the corresponding fiduciary obligations.[14] Owners relying on an agency relationship should consider defining disclosure obligations, conflict management procedures, and rights of access to project information and records. Both parties should also consider whether limitation of liability, waiver, indemnity, and dispute resolution provisions should extend to equitable claims such as breach of fiduciary duty.
Conclusion
The decision is noteworthy not because it confirms that agents can owe fiduciary duties, but because it suggests that a construction management agency clause, of the kind more commonly found on CCDC 5A and other “construction manager not at risk” projects, may be enough to support such a claim.[15]
For parties negotiating construction management contracts, particularly on “construction manager not at risk” projects, the practical lesson is to treat agency language as a substantive allocation of authority and risk (not merely as project-administration boilerplate) and to define its intended scope accordingly. In every case, the answer will depend on what the specific contract says.
[1] Paras. 16, 54.
[2] Para. 42.
[3] Paras. 54, 106-107.
[4] Para. 42.
[5] Para. 43.
[6] Para. 54.
[7] Paras. 64–65, 69.
[8] Paras. 70-71.
[9] Paras. 45, 93.
[10] Para. 56.
[11] Paras. 60–61.
[12] Para. 62.
[13] Paras. 54, 92.
[14] Para. 43.
[15] Paras. 42, 54, 106-107.
