It always bears repeating; Read, understand and comply with the notice provisions in your contract. Adhering to what is laid out in the contract will determine the ability of a plaintiff to take a claim to court.
It was a point made clear by Tristan Neill, an associate with Gowling WLG, during the firm’s 2022 Spring Construction Forum, and discussed in a previous Legal Notes column this past summer.
“It’s very important to know what the contract says, and to do what the contract says you need to do. The courts have been hammering home the message that if you want to bring a claim and want a remedy from the court, the court wants to see that you followed the procedure agreed to in the contract.”
This was emphasized in a case determined two years ago. The Superior Court of Justice for Ontario ruled against a contractor’s attempt to bring claims for extra work against the federal government due to a failure to comply with the contracted notice provisions for such claims.
Elite Construction Inc. was awarded work by Public Services and Procurement Canada (Canada) to construct a new 96-cell unit and associated infrastructure near Kingston, Ont. Although originally contracted at around $17 million, Elite was ultimately paid over $18 million. Project completion ran beyond the originally envisioned completion date by 15 months.
However, over 18 months later, Elite filed a claim totalling $4.6 million related to delays and extra work. These were, according to Elite, due to “change orders, shop drawings and its Requests for Information (RFIs).”
Blame was placed on the federal agency for dragging its feet in their responses.
In its defence, PSPC contended that, under provisions set out clearly in their contract, “the contractor shall give Canada written notice of intention to claim for that extra expense or loss or damage within 10 working days of the date the neglect or delay first occurred.”
Failure to do so would mean, “an extra payment shall not be made to the contractor in respect of the occurrence.”
In fact, Canada said in some cases, Elite provided notice months and even years after the alleged delay and after extra work was performed. Furthermore, Canada contended the extra work was, in any case, within the original scope of the contract and therefore not eligible for further compensation.
Canada also countered that the monthly progress reports submitted by Elite made no mention of any delays to the project and the court agreed.
Elite claimed “a deeper dive” would reveal that it did, in fact, give proper notice according to the contract’s provision. However, the court concluded that, “the ‘grumblings of a contractor’ are not sufficient to constitute notice.”
Aside from the plausibility of the numerous claims made by Elite concerning delays, extra work and their cause, the court ruled, “Elite did not properly request an extension of time to complete the contract. While I understand that Elite may have been frustrated with Canada’s failure to respond as quickly as Elite wanted, I do not find that Canada’s dilatory conduct breached any contractual term.”
“There is an overarching purpose for providing timely written notice in the case of alleged delays,” Robyn Blumberg and Kyle Kuczynski, associates with Cassels Brock & Blackwell LLP, told the Daily Commercial News. “That purpose is to give the owner real notice that there’s a potential delay event, providing the owner with the opportunity to mitigate damages. Without notice, the contractor deprives the owner of that ability.”
Furthermore, parties must pay particular attention to the form in which notice is to be provided under the contract, Blumberg and Kuczynski explained. In other words, raising an issue underlying a claim in a site meeting or informally via email may not meet the contract’s requirements for notice.
In its final determination, the court ordered Elite to pay Canada’s costs of $62,964.06 within 30 days.
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to editor@dailycommercialnews.com.
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