Making a Claim for Extras? Follow the Contract!

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is a litigation lawyer practicing at Perley-Robertson, Hill & McDougall LLP in Ottawa, Ontario. He may be reached at 613.566.2823 or obourns@perlaw.ca.

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Ross-Clair v. Canada (Attorney General) (“Ross-Clair”)[1] is a March 2016 Court of Appeal decision that reaffirmed the Court’s willingness to enforce specific contract requirements in order for contractors and subcontractors to secure payments for extra work. Specifically, the contractor’s correspondence to the owner regarding extra work completed was deemed to include insufficient particulars, contrary to the contract, thus disqualifying the contractor for any claim for compensation. The contractor also delivered a fulsome report detailing its claim for extras, but the report was provided well past the deadline set forth in the contract and, therefore, was given no weight by either the application judge or the Court of Appeal.

The contractor, Ross-Clair, entered into a contract with Public Works and Government Services Canada (“PWC”) for the construction of offices. Ross-Clair advanced a claim for $2,204,676 in extras. The contract between the parties set out what the Court called a “Code” that “governed the rights and obligations relating to a claim for extras”.[2] It is noteworthy that the contract was a standard PWC contract and not the more frequently used standard CCDC – 2 contract, which is relevant because with respect to notices and claims for extras, the PWC contract is more explicit regarding deadlines.

The Code was mostly set out in GC 35 of the contract, which is reproduced in full at paragraph 13 of the Ross-Clair decision. In particular, where the contractor is to assert a claim for an extras, the Code required that Ross-Clair deliver:

  • Notice in writing of an intention to claim within 10 days of the underlying incident (GC 35.3); and
  • A written claim for the extra expense or loss or damage within 30 days of the Final Certificate of Completion, which “shall contain sufficient description of the facts and circumstances of the occurrence that is the subject of the claim to enable the Engineer to determine whether the claim is justified” (GC 35.4).

Further, GC 35.8 specified that failure to give the above notices results in no payment being made to the contractor in respect of the occurrence.

What happened on the project was as follows: [3]

  • On December 5, 2008, Ross-Clair advised in writing that as a result of delays a time extension was required and there would be additional costs incurred by Ross-Clair.
  • From December 2008 to October 2009, Ross-Clair and PWC and/or the project engineer exchanged correspondence relating to Ross-Clair’s request for an extension of time and claim for compensation. PWC and its engineer continually asked for more information and expressed concerns about the requested extension of time. The final correspondence at that time was from PWC requesting further documents and information about the claim, asserting that Ross-Clair was responsible for all delays, reminding Ross-Clair of its contractual obligations, and agreeing to a non-compensable extension of time to complete the project to September 19, 2009.
  • Ross-Clair sent additional correspondence on March 31, 2011 in support of its claim, but this further information contained no breakdown of costs being claimed and simply provided a revised total amount. PWC again responded by confirming that the documentation and information provided to date was insufficient.
  • Ross-Clair’s work was certified by the engineer as complete on February 10, 2012 and 15 months later Ross-Clair delivered a report called “Analysis of Delays and Additional Report” (the “Knowles Report”)

Ross-Claim commenced the application seeking an interpretation of the contract and order compelling the the project engineer to review the claims submitted.[4]

The application judge and the Court of Appeal both agreed that the initial notice provided was sufficient but differed on what the contractor was required to provide by way of a written claim. For ease of reference, the contract required that a claim contain:

[…] a sufficient description of the facts and circumstances of the occurrence that is the subject of the claim to enable the Engineer to determine whether or not the claim is justified.

The application judge stated that this would require “more than notice but less than the proof an arbitrator would require” and further relied on the fact that “the Contract did not contain the phrase ‘detailed claim’ or list specific requirements for the contents of a claim for extras”.[5]

The Court of Appeal determined that the application judge erred by interpreting only one specific provision (35.4) in isolation and not in light of the related sections of the “Code”. In the context of the “Code” as a whole, the Court of Appeal determined that the requirement to provide the engineer with sufficient information to determine if a claim is justified “requires ‘proof’ that the claim is justified”.[6]

Given the Court’s determination that proof was required, the correspondence from Ross-Clair failed to provide support for the amount sought in its claim and, in particular, failed to provide:

[…] information relating to the nature and extent of PWC’s responsibility for the delay, to address whether compensation had already been paid on account of the extra expense or to explain whether the extra expense contained in the $1,437,976 Claim fell within the classes of expenses compensable under GC 35.5 and GC 49 or GC 50, and, if so, in what amount. [emphasis added]

The Court also considered Ross-Clair’s ongoing failure to respond to requests for additional information and documents from PWC and the project engineer. Lastly, the Knowles Report was delivered far too late for consideration.[7]

The decision re-affirms that the parties to a construction contract must be familiar with and follow the contractual requirements to pursue additional payments for extras, delay, or damages of any kind. Where the contract is onerous in terms of requiring expedited notices and claims, parties should ensure they have the mechanisms in place to prepare and deliver notices and claims in a timely manner or they risk disentitling themselves to any such claims.

[1] Ross-Clair v. Canada (Attorney General), (2016) ONCA 205 (Ont. C.A.), <http://canlii.ca/t/gnps8>

[2] Ross-Clair at para 12

[3] Ross-Clair at paras 16-28

[4] Ross-Clair at para 6

[5] Ross-Clair at para 31 and 49

[6] Ross-Clair at para 61

[7] Ross-Clair at para 65

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