By / Andrew D. Delmonico and Matthew T. Potomak
Standard form construction contracts, such as those put out by the Canadian Construction Documents Committee (CCDC), can be an effective means of balancing the rights and responsibilities of the various parties involved in a construction project. However, it is a dangerous practice to simply rely on standard form construction contracts without reviewing and understanding their terms, as well as making sure that all requirements of these agreements are actually followed in practice. The recent case of Campbell Construction Ltd. v. Abstract Construction Inc., 2019 BCSC 113 highlights how failing to strictly follow the terms contained in a standard form agreement can limit your rights.
The Facts
In 2017, Abstract Construction Inc. (“ACI”), as general contractor, retained Campbell Construction Ltd. (“Campbell”), a concrete subcontractor, to complete formwork, concrete, and reinforcing steel (the “Work”) at a development project in Victoria, B.C. (the “Project”).
On March 16, 2017, ACI and Campbell executed a standard form CCDC construction contract (the “Contract”) which, among other things, set out a specific process whereby the parties agreed to refer disputes arising from the Work to binding arbitration.
Although the Work was to be performed in accordance with a mutually-agreed schedule, delays occurred causing the start date to be deferred. As a result, Campbell had to pour concrete during winter months, which required an additive to ensure the concrete set properly. Disputes soon arose as to the extra costs of this additive, as well as who would bear the costs of construction delays. As the relationship soured, both ACI and Campbell pointed the finger at each other as being responsible for the delays.
After Campbell filed a claim of builders’ lien, ACI argued the parties were required to follow the alternative dispute resolution process in the Contract, which prevented Campbell from suing ACI in Supreme Court. Campbell, on the other hand, took the position that this clause was either void or inoperative and commenced an action against ACI and the owner/developer of the Property in the BC Supreme Court to enforce its lien claim.
ACI brought an application requesting the Court to halt the lawsuit on the basis that the parties were required to follow the contractual dispute resolution process rather than suing in Supreme Court.
The Decision
The BC Supreme Court ultimately permitted Campbell’s lawsuit to carry forward, and refused ACI’s application for a stay of these proceedings.
In its decision, the Court examined the terms of the Contract dealing with important notice requirements in relation to disputes and dispute resolution processes. Specifically, the Contract set out a dispute resolution process which could be initiated by a notice of dispute. If the notice of dispute was not issued by the general contractor within the specified time, however, then the general contractor was deemed to have waived its rights to ensure the dispute resolution process was followed.
ACI argued that while it may not have followed the specific requirement to provide notice of dispute, as contemplated by the Contract, it effectively put Campbell on notice through various email correspondence complaining of delays. Campbell ought to have known, ACI argued, that delays were an issue and therefore had notice this would be a subject for dispute resolution.
The Court ultimately held that ACI had failed to give notice in writing as required by the Contract. ACI’s emails to Campbell amounted to mere “grumbles”, and did not constitute proper written notice under the Contract. ACI’s failure to strictly follow the terms of the Contract prejudiced its right to rely on this agreement against Campbell.
Lessons Learned
- Standard form construction contracts, such as CCDC contracts, are frequently used in the industry. However, care should still be taken to review these contracts in advance to ensure you understand and are following key requirements in practice.
- Seek legal advice if you are unclear of certain provisions in a contract you intend to sign. Clearly understanding your rights and responsibilities in advance is a good way to avoid problems down the road. ■
This article was written by Andrew D. Delmonico and Matthew T. Potomak, lawyers who practise in construction law with the law firm of Kuhn LLP. This article is only intended as a guide and cannot cover every situation. It is important to get legal advice for specific situations. If you have any questions or comments about this case or other construction law matters, please contact us at 604.864.8877 (Abbotsford) or 604.684.8668 (Vancouver).