Contract Limitation Clause Precludes Contractor’s Claim Over Against Designer

The limitation periods which apply to construction claims are difficult to sort out at the best of times. They are even more complicated when the limitation period applies to a claim over for contribution or indemnity.

That situation arises when the owner sues the contractor and the contractor then seeks contribution or indemnity from another party involved in the construction project, say a subcontractor or designer. In this situation there are a number of building and consulting contracts in place and there can be a variety of contractual and statutory provisions that contain limitation provisions. The question may be: which provisions trump which?

In Weinbaum v. Weidberg, the Ontario Divisional Court recently held that the contractual limitation period in the contract between the owner and the consultant prevailed when the contractor sought contribution and indemnity from the designer. The contractual limitation period effectively trumped the statutory limitation period for making claims for contribution and indemnity. Since the contractual limitation period had expired, the statutory period was not applicable.

Background

Mr. and Mrs. Weinbaum entered into a contract with Makow Architects for the design and construction of their home. The contract contained a six-year limitation of liability running from substantial completion of the work, which occurred in late 1994.

In January 2010, the Weinbaums commenced an action for damages against Mr. Weidberg, the construction manager of the project. The Weinbaums alleged that they first discovered evidence of extensive water damage and mold growth in August of 2008. The Weinbaums did not sue the architects.

Then, Mr. Weidberg commenced a third party claim against Makow Architects and its principal, Stan Makow (the architects). The third party claim sought indemnity from the architects on the basis that their conduct caused or contributed to any damages suffered by the Weinbaums. Mr. Weidberg alleged that the architects failed to carry out their duties to the Weinbaums and did not assert an independent or contractual claim against the architects.

Statutory Regime

Section 18 of the Ontario Limitations Act, 2002 states as follows:

“18.  (1)  For the purposes of subsection 5 (2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place. (underlining added)

As can be seen in the first underlined portion, Section 18(1) states that the subsection is “for the purpose of subsection 5(2) and 15.” So one has to understand those latter provisions, as well as section 4.

Under section 4, unless the Act provides otherwise, a proceeding “shall not be commenced after the second anniversary of the day on which the claim is discovered.” So Section 4 establishes the general two-year limitation period that starts on the discovery of the claim, not on the day of the wrongful act.

Section 5(1) then establishes a number of criteria for determining the date when the claim is discovered. Summarizing the subsection, that date is the date when the plaintiff first knew, or ought to have known, that damage has occurred which arose from an act or omission of the defendant for which a civil action was an appropriate remedy.

Section 5(2) then says that a person with a claim “shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.” So the plaintiff has the burden of showing that it first knew or ought to have known of the claim on a later date than when the act or omission took place.

Section 15 then sets an ultimate limitation period. That ultimate limitation period is the “15th anniversary of the day on which the act or omission on which the claim is based took place. “ Thus, even though the normal limitation period is based on the date of discovery, the ultimate limitation period is based on the date of wrongful conduct. That ultimate limitation period over-rides the normal limitation period so that, once the 15 years expires, the claim expires even if not discovered.

Motion Judge’s Decision

The Motion Judge held that section 18 of the Act was intended to alter the previous law of limitations applicable to claims for contribution and indemnity, and that all those claims now have a general two year limitation period running from there date when the person seeking contribution and indemnity is served with the Plaintiff’s claim. Accordingly, the Motion judge held that the third party claim was commenced within that limitation period.

Divisional Court’s Decision

The Divisional Court held that section 18 does not change the previous law with respect to contractual limitation periods. Under that law (as most notably held by the Supreme Court of Canada in Giffels Associates Ltd. v. Eastern Construction Co., [1978] 2 S.C.R. 1346), a claim over for contribution and indemnity cannot be made by a defendant against a third party if that third party is not liable to the plaintiff due to the expiry of a limitation period in the contract between the third party and the plaintiff.

The Divisional Court acknowledged that section 18 does over-rule statutory limitation periods, including sections 4 and 5 of the Limitations Act, 2012 itself and other statutory limitation periods (such as those governing the engineering and other professions). Nevertheless, the Divisional Court held that contractual limitation periods are not affected by section 18. In arriving at this conclusion, the Court referred to a number of decisions of the Ontario Court of Appeal which, in its view, indicated that section 18 did not apply to or over-rule contractual limitation periods. It also expressed the view that the policy of the law is to leave parties to make their own commercial contracts absent a reason to the contrary relating to consumer protection or the like.

Accordingly, the Divisional Court dismissed the contractor’s third party claim over against the architects.

Discussion

This decision is very important for the construction industry for three reasons.

First as already noted, building projects almost always involve a number of parties, and if something goes wrong then each party that is sued will almost invariably wish to claim over against one or more of the other parties involved in the project, asserting that those other parties are responsible, in whole or in part, for the loss or damage.

Second, building contracts often contain a limitation period that runs from a specific date or occurrence – usually substantial or final completion of the project. Thus, the CCDC contracts have a six-year limitation period running from substantial completion.

Third, damages arising from a construction project may be discovered many years after the project is completed. If the owner has a CCDC-type contract with its contractor, then the owner can’t sue the contractor once that limitation period expires. But under the discovery-based regime in the Ontario Limitations Act, 2002 – and in the limitation statutes of most Canadian provinces –the owner can bring an action against other parties involved in the building project until two years expires after the owner knew or ought to have known of the damage. That discovery may occur many years later. According to the decision in Weinbaum v. Weidberg, those parties are precluded from claiming over against the contractor.

For this reason, any party involved in a building project should be aware of the terms, and in particular the limitation term, of the other contracts under which other parties are providing work or materials to the project. It may seem presumptuous for one party to a construction project to ask to see the terms of all other contracts, and very unlikely that this will occur in practice. But the Divisional Court’s decision makes it advisable to do so.

Moreover, if a party is sued then that party must immediately assert any claims for contribution or indemnity. Any hesitation may result in the passage in the meantime of a limitation period in another contract applicable to the project. In Weinbaum v. Weidberg, the limitation period in the prime contract had long since passed so there was nothing that the contractor could do.

The whole problem arising in Weinbaum v. Weidberg is due to two factors.

First, different limitation periods are expressed to run from different dates: date of discovery, date of a wrongful act, and a specific date (such as substantial completion). Obviously, when there are different limitation periods, then they will expire at different times.

Second, courts have refused to synchronize these dates. In Weinbaum v. Weidberg, the Divisional Court could have synchronized the limitation periods by holding (as the Motion Judge did) that section 18 applied to all claims over for contribution and indemnity, including contractual claims.

The Divisional Court’s policy reason for its decision is open to debate. It held that the parties should enjoy the freedom to contract as they wish, including with respect of limitation periods. That approach may be suitable when one is dealing with parties to the same contract. They may wish to agree to a contractual limitation period for claims between themselves. That approach, however, seems more problematic when dealing with claims for contribution or indemnity. In that situation, the parties have not contracted with each other. They have both entered into contracts with other people to provide services or materials to the project. Thus, in Weinbaum v. Weidberg, the contractor and the architect each contracted with the owner, not with themselves. Is it fair that the terms in the contract between the owner and the architect should bar a claim over by the contractor against the architect, when the contractor is sued by the owner? Is that fair when the owner did not assert its claim against the contractor until limitation period for suing the architect had gone by? Maybe, but it doesn’t seem to have much to do with freedom of contract.

Another reason why the result in Weinbaum v. Weidberg appears unfair is that, generally speaking, the plaintiff can recover its full loss from the defendant even if the loss was partly caused by another party.  When a limitation period in a contract that the plaintiff has made with another party blocks a claim over by the defendant against that other party, perhaps the plaintiff should only be able to recover from the defendant the portion of the damage attributable to the defendant’s conduct.

The construction industry might be advised to consider whether the present regime relating to claims over for contribution or indemnity is a fair one, and to seek amendments to the Limitations Act, 2002 if that regime is considered to be unfair.

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed., chapter 9, part 3.

Weinbaum v. Weidberg, 2017 CarswellOnt 3205, 2017 ONSC 1040

Building Contracts – Limitation Periods – claims for contribution and indemnity

Thomas G. Heintzman O.C., Q.C., LL.D (Hon.), FCIArb                         April 16, 2017

www.heintzmanadr.com

www.constructionlawcanada.com

This article contains Mr. Heintzman’s personal views and does not constitute legal advice. For legal advice, legal counsel should be consulted.

 

New International Commercial Arbitration Act Enacted In Ontario

On March 22, 2017, a new International Commercial Arbitration Act, 2017 came into force in Ontario (the 2017 ICAA). The 2017 ICAA is contained in Schedule 5 to the Burden Reduction Act, 2017, SO 2017, c. 2.. The 2017 ICCA replaces the existing Ontario International Commercial Arbitration Act, RSO 1990, c I.9 (the Old ICAA).

The 2017 ICAA introduces into Ontario law the UNCITRAL Model Law updated as of July 7, 2006 (Updated Model Law). The Updated Model Law is attached as Schedule 2 to the 2017 ICAA. The 2017 ICAA also makes other amendments to the existing Ontario International Commercial Arbitration Act (Old ICAA).

In addition, a number of other statutes are annexed to Burden Reduction Act, 2017 which affect international dispute resolution, including the International Choice of Court Agreement Convention Act, 2017.

Practitioners involved in arbitration in Ontario should be aware of the changes that are introduced by the 2017 ICAA. Here are some of the more notable changes.

  1. Limitation period

Section 10 of the 2017 ICAA introduces a new ten year limitation period for the recognition and enforcement of international commercial arbitration awards, starting in January 2019. Section 10 states as follows:

“10. No application under the Convention or the Model Law for recognition or enforcement (or both) of an arbitral award shall be made after the later of December 31, 2018 and the tenth anniversary of:

(a)  the date on which the award was made; or

(b)  if proceedings at the place of arbitration to set aside the award were commenced, the date on which the proceedings concluded.”

A similar ten-year limitation period for domestic arbitrations is introduced by section 13 of the 2017 ICAA. Under that section, subsection 52 (3) of the Arbitration Act, 1991 is repealed and the same 10 year limitation period is introduced, commencing in 2019. The commencement of the limitation period is expressed slightly differently, as being:

(a)  the day the award was received; or

(b)  if an application to set aside the award was commenced, the date on which the application was finally determined. (underlining added)

The Old ICAA and the Model Law attached to it do not contain a limitation period. The limitation period for the enforcement of international commercial arbitration awards was settled in Canada in Yugraneft Corp. v. Rexx Management Corp., [2010] 1 S.C.R. 649. In that decision, the Supreme Court of Canada held that the general two-year limitation period in Alberta’s limitation statute applied to such an enforcement in Alberta.

The March 2014 report of the Uniform Law Conference of Canada (ULCC) expressed the view that a two-year limitation period for the enforcement of an arbitral award is too short and not consistent with the limitation periods in other countries. The ULCC report recommended a 10-year period, which has been adopted by the Ontario legislature.

  1. Appeals re Preliminary Decision Declining Jurisdiction

Section 11 of the 2017 ICAA provides for an appeal to the Superior Court in the following words:

(1)  If, pursuant to article 16 (2) of the Model Law, an arbitral tribunal rules on a plea that it does not have jurisdiction, any party may apply to the Superior Court of Justice to decide the matter.

(2)  The court’s decision under subsection (1) is not subject to appeal.

(3)  If the arbitral tribunal rules on the plea as a preliminary question and an application is brought under this section, the proceedings of the arbitral tribunal are not stayed with respect to any other matters to which the arbitration relates and are within its jurisdiction. (underlining added)

Article 16(3) of the Model Law says that if the arbitral tribunal “rules as a preliminary question that it has jurisdiction,” there is an appeal to the court, and that there is no appeal from the court’s decision. The Model Law does not expressly provide for an appeal in the event that the arbitral tribunal decides that it does not have jurisdiction. Section 11 if the 2017 ICAA now provides for an appeal in that situation, but (reflecting the Model Law on this point) there is no appeal from the Superior Court’s decision.

There are several interesting questions about Section 11 and Article 16. First, why did drafters of the Model Law not provide for an appeal if the tribunal declines jurisdiction? According to the March 2014 report of the ULCC, the drafters of the Model Law felt that it was “inappropriate to compel a tribunal to decide matters that it concluded it lacked jurisdiction to decide“ and accordingly gave the court no power to reverse the tribunal’s decision and require it to decide the dispute. The drafters of the Model Law may also have been of the view that a decision by the arbitral tribunal declining jurisdiction is a final award and subject to an application for judicial review of the award under Article 34 of the Model Law. The view that a negative jurisdictional decision is a final award and subject to appeal under Article 34 is apparently shared by Gary Born as expressed in International Commercial Arbitration (2nd ed., 2014, Vol. 1, p. 1104).

If there is a right to review an arbitral award declining jurisdiction, then the normal rights of appeal would presumably apply to that application. The drafters of the Model Law may have decided to provide for an appeal from a decision of an arbitral tribunal accepting jurisdiction because such a decision is an interlocutory, not a final award, and there is no other recourse against such an award.

The Ontario legislature has accepted the recommendation of the ULCC that there should be an appeal if the arbitral tribunal declines jurisdiction. The reasons for the ULCC’s recommendation were that:

  • the international consensus favours allowing appeals from negative rulings;
  • it is unfair and inconsistent to allow appeals from positive rulings without also allowing appeals from negative rulings;
  • denying the opportunity to correct erroneous negative rulings can lead to injustice and frustrate the parties’ intention of avoiding litigation in national courts; and
  • parties may prefer to seat their arbitrations in states that allow appeals from negative rulings.

Section 11(1) of the 2017 ICAA is drafted in a rather ambiguous way. One is left to wonder whether the words “that it does not have jurisdiction” modify the word “plea” or the word “rules”. If the former, then an appeal may be taken whichever way the tribunal rules. If the latter, then an appeal may not be taken if the ruling is that the tribunal does have jurisdiction. Since Article 16 provides for an appeal if the tribunal decides that it has jurisdiction this ambiguity may not be important since on either reading, Section 11(1) provides for an appeal if the tribunal holds that it does not have jurisdiction. It is likely that the 2017 ICAA was drafted to allow for an appeal when the tribunal held that it did not, to fill this loophole in the Model law.

What is the impact of section 11 of the 2017 ICAA? Is an appeal under section 11 the exclusive remedy if the arbitral tribunal declines jurisdiction, in which case there is no appeal from the order of the Superior Court? Or is there a right, under Article 34, to bring an application to the Superior Court to review an arbitral decision declining jurisdiction on the basis that the decision is a final award? If there is a right of review under Article 34, is there a right of appeal from that review notwithstanding section 11(2) of the 2017 ICAA?

The second issue relates to res judicata and issue estoppel. If the arbitral tribunal decides to accept jurisdiction and continue with the hearing, and there is no appeal from that decision, presumably there is no issue res judicata at that point, and the final arbitral award is subject to review on all grounds, including jurisdiction. But if, under Article 16(3) of the Model Law, a party appeals to the court the decision of the arbitral tribunal accepting jurisdiction, is the court’s decision res judicata?  If so, then that factor has a big impact on the decision to appeal to the Superior Court.

Similarly, if the arbitral tribunal declines jurisdiction, an appeal is taken, and the court reverses the arbitral tribunal and sends the matter back to the tribunal, is that decision of the court res judicata? Or is the party objecting to the tribunal’s jurisdiction entitled to raise that objection in a later application to review the final award, or in defence in an application to enforce the final award? Articles 34 and 35 of the Model Law expressly state that lack of jurisdiction is a ground to review, and to refuse the recognition and enforcement of, an arbitral award. In effect, can the jurisdiction of an arbitral tribunal always be raised?

  1. Interim relief

The Updated Model Law contains a much broader power for an arbitral tribunal to grant interim relief. As summarized in the ULCC report:

  • Article 17 of the Updated Model Law re-states the authority of arbitrators to award interim measures and then adds a description of the categories of permissible interim measures.
  • Article 17A sets out the tests that applicants for interim measures must meet. The tests are:

(a) Irreparable Harm that substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and

(b)  A reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility is not to affect the discretion of the arbitral tribunal in making any subsequent determination.

  • Article 17B empowers the arbitral tribunal to make preliminary orders and the conditions for granting such orders. These orders may be granted ex parte if the tribunal decides that the disclosure of the request for an interim measure will frustrate the purpose of the interim measure.
  • Article 17 C sets forth the specific regime for preliminary orders. While a preliminary order expires twenty days after its issuance, its terms may be adopted or modified in an interim measure. A preliminary order is binding on the parties but not subject to enforcement by a court, and does not constitute an award.
  • Article 17D authorizes arbitrators to modify, suspend or terminate interim measures.
  • Article 17E authorizes arbitrators to require applicants for interim measures to provide security.
  • Article 17F requires prompt disclosure of all material circumstances and of any changes in circumstances that might have a bearing on the interim measure.
  • Article 17G creates a cause of action for damages and costs against parties who obtain interim measure that the tribunal later concludes should not have been granted.
  • Article 17H makes orders or awards for interim measures enforceable in a similar manner to other awards.
  • Article 17I sets out the grounds on which a court may refuse recognition and enforcement of interim measures.
  • Aricle 17J gives the court the same powers regarding interim measures in relation to arbitration proceedings as the court has in relation to court proceedings.

With the 2017 ICAA now in force, Ontario practitioners in the field of international commercial arbitration will have to become familiar with the broader interim relief regime contained in the Updated Model Law.

  1. Written Agreement

Article 7 of the Updated Model Law provides two alternative forms of arbitration agreement that qualify as an “arbitration agreement” under that Law. Option 1 is a written agreement which is of the same nature as the arbitration agreement as defined in the present Model law. Option 2 is a less formal agreement, simply “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.” Section 5(2) of the 2017 ICAA adopts Option 1, so there is no change in the Ontario law in this respect.

  1. Enforcement of an award

Article 35(2) of the Updated Model Law states that the party relying on an award or seeking to enforce it “shall supply the original award or a copy thereof.” Article 35(2) of the prior Model Law required that party to provide a “duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement….or a duly certified copy thereof.” So, under the Updated Model Law, the party seeking to rely upon the award or enforce it need not, at least in the first instance, provide the arbitration agreement or a copy of it.

Other Statutes annexed to the Burden Reduction Act, 2017

In addition to the 2017 ICAA, there are many other statutes attached to the Burden Reduction Act, 2017, including the International Choice of Court Agreement Convention Act, 2017, the International Electronic Communications Convention Act, 2017, the International Recognition of Trusts Act, 2017 and the International Sale of Goods Act Amendments.

For practitioners involved in international disputes, the International Choice of Court Agreement Convention Act, 2017 is particularly important. That Act adopts the International Choice of Court Agreement Convention. The Convention seeks to put court litigation in a similar position to arbitration, so far as reciprocal enforcement is concerned. Clearly, reciprocal enforcement is one of the great advantages of international arbitration. Those engaged in court litigation have long since wanted court judgments to enjoy the same reciprocity of enforcement.

Reciprocity of enforcement for court judgments is achieved in the Convention by permitting parties to enter into a written “exclusive choice of court agreement” for the purpose of choosing a court to decide disputes “which have arisen or may arise in connection with a particular legal relationship.” If they do, then the selected court may not decline to exercise jurisdiction on the ground that some other court should decide the dispute and, except in limited circumstances, any other court shall decline to decide the dispute. The judgment of the chosen court shall be enforced by the courts in all other signatory countries, and those latter courts shall not review the merits of the dispute or the facts found by the chosen court. A judgment shall be recognised only if it has effect in the State of origin, and shall be enforced only if it is enforceable in the State of origin.

The Convention is subject to a broad exclusion of subject matters, including amongst others: consumer claims; employment contracts including collective agreements; status and legal capacity of natural persons; maintenance and family law matters; wills and succession; insolvency and composition; carriage of passengers and goods; marine pollution, limitation of liability for marine claims, anti- trust; person injury for natural persons; tort claims for damage to tangible person property not arising from contracts; and certain claims relating to intellectual property. By these exclusions, the Convention appears to focus on the court resolution of commercial disputes.

Ontario’s adoption of the International Choice of Court Agreement Convention may well encourage Ontario parties to insert choice of court agreements into their dealings with foreign parties and to rely on that Convention to enforce their rights, and not international arbitration. The difficulty, of course, is in coming to an agreement on a court to settle all claims between the parties. Each party may not want the courts of the other party’s country to decide the disputes between them. So arbitration may still be their preferred option.

See Heintzman and Goldsmith on Canadian Building Contracts, 5th Ed. Chapter 11

Arbitration – International Commercial Arbitration – new legislation

Thomas G. Heintzman O.C., Q.C., LL.D (Hon.), FCIArb                     April 9, 2017

www.heintzmanadr.com

www.constructionlawcanada.com

This article contains Mr. Heintzman’s personal views and does not constitute legal advice. For legal advice, legal counsel should be consulted.

 

 

 

Construction Contract Held To Mandate The Payment Of Extras

One of the most contentious issues in building contracts is mechanism to ensure that the contractor is guaranteed payment for extras, and that the owner is guaranteed not to pay for something that is not an extra. It would be simple to state these propositions in a building contract, but they usually aren’t there.

However, in King Road Paving and Landscaping Inc. v. Plati, the Ontario Superior Court of Justice found that that is exactly what the contract said. The contract was for the renovation of a barn, to convert it into a “marijuana grow operation” said the contactor, or a nightclub said the owner. The parties entered into an initial written contract to renovate the barn. However, there were no signed contracts for much of the work that was done and the payments for the work were largely made in cash without any receipts. There were disputes over a large amount of work for which additional payment was claimed by the contractor.

The Decision

The court performed a two-stage test to determine if the owner was obliged to pay for this work:

“in the absence of any written agreements relating to extras, the only way to determine whether something is an extra is by reference to the original contract. A secondary issue is whether the work claimed was actually performed, and, if so, the cost of such work.

Having performed this exercise, the court held that under the following term of the contract, the contractor was entitled to be paid for this work:

“All work not stated will be a charge of time and materials.”

Accordingly, the court found that since the work was done, and was not covered by the written contract, the owner was required to pay for it. Payment was to be the basis of “time and material” where invoices or other evidence supported the claim.

In arriving at this conclusion, the court found that the owner’s representative was on the site and therefore aware that the work was being done. As the court said:

“[the owner] often assumed (or perhaps hoped) that any extras would be covered by the price set out in the contract. That, however, is not what the contract provides.”

Discussion

Why make a fuss about this simple little case? Because the building contract stated an express obligation to pay for extra work that so many building contracts don’t quite state.

Thus, the CCDC contracts never quite state that obligation. Instead, they construct an elaborate regime under which the consultant is to oversee the progress of the work and rule on whether work or materials are extras, and then an equally elaborate procedural regime relating to dispute resolution, change orders and changed conditions. Those regimes appear to intend that the contractor will be paid for extra work and materials, and that the owner won’t pay for work and materials that are covered by the contract. But they never quite say that expressly.

The real problem is with respect to work that, during the job, the owner says the contractor must perform as it is within the contract and the contractor says is not within the contract. If the consultant sides with the contractor and the contractor feels obliged to proceed with the work, the contractor may be shut out of a quantum meruit claim based upon the decision of the Supreme Court of Canada in Peter Kiewit Sons Co. of Canada v. Eakins Construction Ltd. [1960] S.C.R. 361. If the contractor refuses to do the work, then the owner may terminate the contract and sue the contractor for damages.

It is this conundrum that the dispute resolution and change order provisions of the CCDC contracts are intended to address. They are intended to ensure that the contractor can proceed with the work without prejudicing its claim for extra payment for the work. The court or arbitrator can later determine that the work or materials were or were not part of the contract, and if they were not, then the contractor is entitled to be paid for them.

This is the result that the Supreme Court of Canada arrived at in Corpex (1977) Inc. v. Canada, 1982] 2 S.C.R. 643. The Court said that, as long as the contractor gives timely notice under these procedural clauses of its claim that the work is an extra (or is due to unforeseen circumstances, or due to the owner’s delay or whatever the claim arises from), then the contractor is “practically certain of being compensated for additional costs”.

The words “practically certain” aren’t the strongest foundation for a claim in these chancy circumstances, but coming from the Supreme Court of Canada contractors have been relying on them to proceed with the work and assert the claim. But those words are, perhaps, appropriate because the sorts of extras/changed condition/dispute resolution provisions dealt with in Corpex provide procedural remedies. They don’t actually say that the contractor will be paid. But they must mean that, as long as the contractor gives timely notice and the work and labour is later found to be extra to the contract.

Refreshingly, in twelve rather inelegant words, the contract in the King Road Paving case said exactly that: the contractor will be paid for extra work. Maybe other building contracts can say exactly that.

Thomas G. Heintzman O.C., Q.C., LL.D (Hon.) FCIArb                   April 1, 2017

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed., chapter 4, part 8 and chapter 10, part 6(c).

King Road Paving and Landscaping Inc. v. Plati, 2017 CarswellOnt 1712, 2017 ONSC 557

Building contract – extra work and materials – quantum meruit –

This article contains Mr. Heintzman’s personal views and does not constitute legal advice. For legal advice, legal counsel should be consulted.